MASTER 

NEGATIVE 
NO.  94-82021 


COPYRIGHT  STATEMENT 


The  copyright  law  of  the  United  States  (Title  17,  United  States  Code) 
governs  the  making  of  photocopies  or  other  reproductions  of  copyrighted 
materials  including  foreign  works  under  certain  conditions.  In  addition 
the  United  States  extends  protection  to  foreign  works  by  means  of 
various  international  conventions,  bilateral  agreements  and 
proclamations. 

Under  certain  conditions  specified  In  the  law,  libraries  and  archives  are 
authorized  to  furnish  a  photocopy  or  other  reproduction.  One  of  these 
specified  conditions  Is  that  the  photocopy  or  reproduction  is  not  to  be 
used  for  any  purpose  other  than  private  study,  scholarship,  or  research  " 
IT  a  user  makes  a  request  for,  or  later  uses,  a  photocopy  or  reproduction 
for  purposes  in  excess  of  "fair  use,"  that  user  may  be  liable  for  copyright 

The  Columbia  University  Libraries  reserve  the  right  to  refuse  to  accept  a 
copying  order  if,  in  its  judgement,  fulfillment  of  the  order  would  involve 
violation  of  the  copyright  law. 


Author: 


National  civic  federation 
Social  insurance... 

Title: 

Second  report  of  the 
Committee  on  foreign... 

Place: 

New  York 

Date: 

[1 920] 


Q(/-^;iO^/'l 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


MASTER   NEGATIVE  * 


ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


1268 


L 


National  civic  federation,   Social  insurance 
dept.  Committee  on  foreign  inquiry. 
Second  report  of  the  Gomnittee  on  foreign 

inquiry.   Social  insurance  department.   October 

If  19?0.   New  York,  National  civic  federation 

[19*50^ 

cover-title,  \(^A   p.    9,i   en. 


c 


RESTRICTIONS  ON  USE: 


TECHNICAL  MICROFORM  DATA 


FILM  SIZE:   -^.-^.n^ 


REDUCTION  RATIO:     /^  / 


IMAGE  PLACEMENT:  lA    (jg)  IB     IIB 


DATE  FILMED:  ^/^k^ 


INITIALS:    tcJ<. 


TRACKING  #  : 


M^H     00  0  6'^ 


FILMED  BY  PRESERVATION  RESOURCES.  BETHLEHEM,  PA. 


'4^. 


A' 


3 
3 


> 

QJ   O 

c  ^ 

o  m 

CD  O 


CO  ^ , 

^  o  O 


N 


X 

M 


^c^ 


en 

O 

3 
3 


o 
o 

3 

3 


o 


Pi^niip,?,.,.!- 


1^ 


CO 


bo 


o 


00 


!g 


NO 


1.0  mm 


1.5  mm 


2.0  mm 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 
abcdefghi)klmnopqr5tuvwxy2l234567890 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 
abcdefghijklmnopqrstuvwxyzl234567890 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 

abcdefghijklmnopqrstuvwxyz 

1234567890 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 
o  r-  abcdefghijklmnopqrstuvwxyz 

2.5  mm  1234567890 


\&> 


^p 


^o 


^o 


fp 


f^ 


V 


^P 


& 


^CP 


?* 


fp 


^fo> 


m 

O 

O 
■o  m  "o 

I  ^  S 

I  Tj  ^ 

^Ooo 

m 

33 
O 

m 


^^^ 


"p 


3 
3 


f? 

^-< 

OOISI 


$ 


^CP 


^•cP 


fp 


o 

3 
3 


0» 

-.m 

■D  p 

^i 
•-♦•  z 
^o 
^  "0 

^  :c 

CT»X 

CJOM 

VO 

O 


fo> 


3 
3 


CO 
CJl 

^' 

00 

o; 


/>. 


EyELUTIVE  COUHDL 


•atimt 


OF 


THE  WATlOriM  CIVIC  FETJERKTIOrt 


i 


# 


/ 


>S^^ 


^^^5Y 


LIBRARY 


School  of  Business 


r 


I 


V 


'jjj"' 


4 


7 


'-.Jt 


i"' 


LIBK/^a  i\ 


n 


\     r  -■   .        f„ 


SECOND  REPORT 


OF  THE 


Committee  on  Foreign  Inquiry 


Social  Insurance  Department 


3^ 


October   i,   1920 


THE  NATIONAL  CIVIC  FEDERATION 

Headquarters:  Thirty-third  Floor 
Metropolitan  .  Tower 

New  York  City 


-'TgntOiB^''    ''<■"*" 


I  ^1 


/ 1^ 


/-/ 


vo 


^ 


LIBRARY 
SCHOOL  OF  BUSINESS 

EXECUTIVE    COUNCIL 

OF 

Cbe  national  Civic  federation 


I: 


«\ 


33rd  Floor  Metropolitan  Tower 
New  York  City  ^/ 


AlyTON  B.  PARKER.  Presideni 

SAMUEI^  GOMPERS.  Vice-Fresideni 

V.  EVRIT  MACY,  Vice-President 

MORGAN  J.  O'BRIEN.  Treasurer 

RALPH  M.  EASLEY. 

Chairman  Executive  Council 

JOHN  HAYS  HAMMOND,  Chtn.  Dept. 
Regulation  of  Industrial  Corporations 

GEORGE  W.  PERKINS 

Chairman  Department  on  Profit  Sharing 

LOUIS  A.  COOUDGE 

Chairman  Welfare  Department 

FRANCIS  R.  MAYER.  Chairman  Indus- 
trial Training  Department 

MISS  MAUDE  WETMORE 

Chairman    Woman's  Department 

TAIvCOTT  WILLIAMS.   Chairman  Indus- 
trial Economics  Department 

CONDE  B.  PALLEN.  Chairman  Depart- 
ment on  Study  of  Revolutionary 
Movements 


AUGUST  BELMONT.  Chairman   Work- 
men's Compensation  Department 

WARREN  S.  STONE 

Chairman  Social  Insurance  Department 

EMERSON  McMILLIN.  Chairman  Dept. 
Regulation  of  Public  Utilities 

WILLIAM   JAY   SCHIEFFELIN.   Chair- 
man Committee  on  National  Defense 

VINCENT  ASTOR 

Chairman  Food  and  Drugs  Department 

JEREMIAH  W.  JENKS.   Chairman  De- 
partment on  Industrial  Mediation 

A.  J.  PORTER  ^         .    . 

Chairman  Minimum  Wage  Commtss*OH 

LOUIS  B.  SCHRAM.  Chairman  Industrial 
Accidents  Prevention  Dept. 

WILLIAM  R.  WILLCOX 

Chairman  Department  on  Pensions 

GERTRUDE  BEEKS  EASLEY 
Secretary  Executive  Council 

D.  L.  CEASE,  Secretary  The  National 

Civic  Federation 


) 


Letter  of  Transmittal 

April  21,  1920. 

Mr.  Warren  S.  Stone, 

Chairman,  Social  Insurance  Department, 
The  National  Civic  Federation, 
Engineers'  Building, 
Cleveland,  Ohio. 

Dear  Sir: 

I  take  pleasure  in  reporting*  to  you  that  the  Com- 
mittee on  Foreign  Inquiry,  on  which  I  acted  as  the  trade 
union  representative  and,  by  your  appointment,  as  chair- 
man, has  adopted  a  report,  the  findings  in  general  being 
signed  by  all  the  members.  Any  special  study  relating  to 
our  investigations  bears  the  signature  of  the  member 
responsible. 

The  work  of  this  Committee  has  been  carried  on 
throughout  in  harmony.  The  members  have  endeavored 
to  bring  accuracy  of  fact  and  clearness  in  statement  to 
the  discussion  of  the  problem  considered,  bearing  in  mind 
that  its  solution  is  to  affect  closely  the  welfare  and  lib- 
erties of  the  wage-workers  of  our  country. 

Very  truly  yours, 

(Signed)     J.  W.  Sullivan. 


\i 


•The  Report  was  approved  by  Mr.  Stone. 


0 


1 


^    7 


^ 


" 


f 


I 


Mr.  Sullivan's  Report  to  Mr.  Gompers 

April  21,  1920. 

Mr.  Samuel  Gompers, 
President,  American  Federation  of  Labor, 
American  Federation  of  Labor  Building, 
Washington,  D.  C. 

Dear  Sir: 

It  is  gratifying  to  me  to  report,  as  its  trade-union 
representative,  authorized  so  to  act  by  yourself  and  the 
Executive  Committee  of  the  A.  F.  of  L.,*  that  the  Com- 
mittee on  Foreign  Inquiry  has  agreed  upon  a  report,  the 
general  findings  having  the  unanimous  approval  of  the 
members,  while  any  particular  study  of  the  question  bears 
the  signature  of  the  member  by  whom  it  was  conducted. 

The  Committee,  after  investigating  the  present  devel- 
opment of  both  voluntary  and  compulsory  sickness  insur- 
ance in  this  country  and  Europe,  has  endeavored  to  bring 
to  a  foreground  view  the  salient  features  and  results  in 
the  operation  of  either  as  affecting  the  weKare  and  lib- 
erties of  the  wage-workers. 

The  report  of  the  Committee,  it  is  understood,  will 
shortly  be  published  by  The  National  Civic  Federation. 

Yours  fraternally, 

(Signed)     J.  W.  Sullivan. 


♦For  action  taken  by  American  Federation  of  Labor  to  date  see 
pp.  71-83,  inclusive. 


{ 


SECOND  REPORT 
Committee  on  Foreign  Inquiry 


Contents 

Conclusions  and  Recommendations,  by  the  Com- 
mittee    5 

Recent  Social  Insurance  Experience  in  Great  Brit- 
ain, with  Particular  Reference  to  Sickness 
Insurance,  by  the  Committee 17 

Brief  Review  of  European  Social  Insurance  Expe- 
rience, by  the  Committee 37 

The  Low  Level  of  European  Compulsory  Insur- 
ance, by  James  W.  Sullivan. > 58 

Social  Insurance  and  the  American  Wage-Workers, 

by  James  W.  Sullivan 68 

Proportions  of  the  Indigent  Class  in  the  Old  World 

and  New,  by  James  W.  Sullivan 107 

A  Study  of  Unemployment  Insurance,  with  Par^ 
ticular  Reference  to  British  Experience,  by 
P.  Tecumseh  Sherman 129 

Proposed  Swedish  Sickness  Insurance  System,  by 

Frederick  L.  Hoffman 143 

Appendix  A— Statement  by  Committee  on  Con- 
structive Plan  15^ 


The  National  Civic  Federation 

Social  insurance  Department 

Warren  S.  Stone,  Chairman 


COMMITTEE  ON  FOREIGN  INQUIRY 

J.   W.   Sullivan,  Chairman^ 

Representing  Wage- Earners,  (Member  Typographical  Union), 

Arthur  Williams, 

Representing  Employers y  (New   York  Edison  Company). 

P.  Tecumseh  Sherman,  Attorney-at-Law. 
Frederick  L.  Hoffman, 

Third   Vice-President   and  Statistician,   The   Prudential 
Insurance  Compan-^  of  America. 


CONCLUSIONS  AND  RECOMMENDATIONS. 

It  goes  without  saying  that  we  are  all  strongly  in  favor 
of  any  measures  or  means  whereby  the  standard  of  life 
may  be  effectually  and  permanently  raised,  not  only  as 
regards  health  but  also  as  regards  welfare  in  general. 
We  feel  that  the  aim  of  social  insurance  in  this  direction 
will  not  be  realized,  confronted  as  we  are  by  evidences  of 
failure  not  far  from  disastrous.  We  attribute  this  result 
to  a  serious  confusion  of  principles  of  public  policy  and 
insurance.  W^e  heartily  endorse  all  efforts  which  may 
aid  the  reduction  of  the  economic  consequences  of  illness, 
accidents,  and  infirmity  among  wage-earners  and  the 
public  at  large,  but  we  are  emphatically  of  the  opinion 
that  the  term  insurance  is  completely  misused  in  this  con- 
nection and  perverted  from  its  accepted  sense  when  ap- 
plied to  social  insurance  as  generally  understood.  Social 
insurance  is  generally  compulsory  and  subsidized  either 
by  the  contributions  of  employers  or  the  state,  or  both. 


To  the  extent  that  this  is  the  case,  all  social  insurance  is  a 
form  of  relief  and  practically  a  poor  law  in  disguise.  In- 
surance in  its  accepted  sense  rests  upon  the  theory  of 
voluntary  contributions  and  the  contractual  obligations 
of  the  parties  concerned.  All  subsidized  insurance  iB 
no  more  and  no  less  than  a  method  of  subsidizing  wages 
insufficient  to  maintain  a  proper  standard  of  life.  As 
thus  conceived  we  look  iipon  social  insurance  as  strongly 
If  opposed  to  the  best  interests  of  our  wage-earners  and  as 

1  certain  to  create  wrongful  class  distinctions  and  social 

I  and  industrial  unrest. 

^  Social  insurance,  and  particularly  compulsory  sick- 
ness insurance,  in  our  opinion,  has  not  been  a  success  but 
a  failure,  for  those  who  have  had  every  reason  to  expect 
to  be  benefited  the  most  have  received  the  least.  The 
poorest  poor  are  not  being  reached  by  this  method  of 
social  amelioration,  and  can  not  be  reached  otherwise 
than  by  a  thoroughly  reconsidered  and  materially  im- 
proved method  of  domestic  or  domiciliary  assistance, 
.clearly  differentiated  from  poor  relief  in  the  generally 
accepted  sense  of  the  term.  For  a  distinction  should 
be  drawn  between  relief  measures  aiming  at  the  needs 
of  the  poor  and  of  the  pauper  elements  respectively.  The 
two  may  have  little  or  much  in  common,  according  to  the 
individual  facts  in  the  case.  We  believe  that  the  existing 
confusion  in  this  respect  is  one  of  the  underlying  causes 
of  the  honest  propaganda  for  compulsory  health  insur- 
ance, which,  though  aiming  at  many  desirable  objectives, 
must,  in  the  future  as  in  the  past,  fall  far  short  of  its 

purpose. 

It  is  from  beliefs — largely  false  or  exaggerated— as 
to  the  success  of  social  insurance  in  Europe,  that  the 
present  movement  for  compulsory  sickness  insurance — 
improperly  termed  health  insurance — in  this  country  is 
obtaining  its  principal  impetus. 

Therefore  the  pending  proposals  for  compulsory  sick- 
ness insurance  are  to  be  studied,  particularly  in  the  light 
of  European  experience,  first,  as  means  to  the  particular 


I 


ends  ascribed  to  them,  and,  secondly,  with  reference  to 
their  relations  to  the  entire  field  of  social  insurance. 
Social  insurance  in  Europe  has  taken  three  main 

forms : 

Compulsory  insurance,  subsidized. 

Compulsory  insurance,  unsubsidized. 

Voluntary  insurance,  subsidized. 
In  the  first  place,  it  should  be  noted  that  under  all 
forms  of  compulsory  insurance  the  employers  generally 
are  obliged  to  contribute.  This  is  held  out  as  a  great 
advantage  to  the  working  people.  In  our  opinion  it  is 
no  advantage  and  should  not  be  allowed  to  operate  as  an 
inducement  to  the  working  people  to  accept  a  system  of 
insurance  that  would  otherwise  be  unacceptable. 

Where  social  insurance  is  subsidized  by  the  state,  it 
becomes  more  or  less  confused  with  poor  relief.  In  some 
cases,  as  in  the  Swedish  invalidity  insurance,  all  the 
people  with  property,  incomes  or  earnings  are  taxed,  each 
to  maintain  insurance  for  himself,  and  poor  relief  is 
added  discriminatingly  only  for  those  whose  contributions 
have  been  insufficient  to  insure  themselves  a  minimum  for 
existence.  But  in  other  cases  all  wage-workers,  or  all 
wage-workers  in  certain  categories,  are  segregated  in  a 
separate  class  of  the  community  and  made  indiscriminate- 
ly the  beneficiaries  of  poor  relief.  This  practice  is  ex- 
plainable in  Europe  by  the  fact  that  the  wage-workers, 
as  a  ivhole  on  a  level  of  poverty  unknown  in  most  parts 
of  America,  are  calling  for  drastic  remedies.  We  do  not 
believe  that  American  wage-workers  should  be  reduced  to 
this  level.  Poor  relief  should  be  applied  with  discrimina- 
tion and  in  the  exceptional  cases  where  needed.  The] 
great  body  of  American  wage-workers  belong  in  the  self-  I 
sufficient  class  and  should  be  so  recognized  in  law.  J 

r     AVhat  has  just  been  said  would  not  preclude  the  state 
I  from  organizing  and  even  subsidizing  institutions  pro- 
(  viding  small  insurances  open  to  all  the  people.    What  has 
Deen  done  in  this  way  in  France  deserves  careful  study 
before  law-makers  decide  upon  lines  of  state  action. 


/ 


8 

As  between  compulsory  insurance,  on  the  one  hand, 
and  voluntary,  state-subsidized  insurance,  on  the  other, 
decision  should  be  made — if  choice  is  to  be  made  between 
them — only  after  a  thorough  study  of  the  experience  with 
voluntary  subsidized  insurance  in  France,  Denmark  and 
Sweden.  We  are  aware  that  a  change  from  voluntary 
subsidized  to  compulsory  sickness  insurance  is  now  im- 
pending in  Sweden;  and  that  recent  drift  in  some  other 
countries  of  Europe  has  been  in  the  same  direction.  But 
as  to  that  drift  three  facts  stand  out  which  should  make 
us  slow  about  jumping  to  conclusions. 

First.  The  drift  to  compulsory  insurance  is  only  one 
current  in  a  broad  tide  moving  toward  some  form  of 
socialism,  usually,  more  specifically,  **  state-socialism. ' ' 
Logically  the  state-socialist  program  should  be  adopted 
entire  or  not  at  all.  There  would  be  inconsistency  for 
this  country  to  select  one  feature  of  the  socialist  state 
machinery,  and  try  to  incorporate  it  in  the  social  machin- 
ery of  a  state  which  in  other  respects  adheres  to  the  prin- 
ciples of  the  economic  independence  of  the  citizen. 

Second.  In  Europe  the  more  impressive  compulsory 
social  insurance  systems  have  been  adopted  only  after 
the  development,  by  subsidies  or  otherwise,  of  well  organ- 
ized systems  of  voluntary  insurance,  and  have  been  ap- 
plied in  first  instance  only  to  the  industries  largely  cov- 
ered by  pre-existing  voluntary  insurance  organizations, 
and  have  used  those  pre-existing  voluntary  organizations, 
temporarily  or  permanently,  as  the  cornerstones  of  the 
compulsory  systems.  In  other  words,  those  compulsory 
insurance  systems,  generally,  are  not  the  pure  and  sudden 
creations  of  bureaucrats,  to  which  the  people  have  had  to 
fit  themselves,  but  are  largely  methods  and  means  of 
insurance  slowly  developed  by  the  insured  to  suit  them- 
selves, subsequently  enlarged,  standardized  and  aided 
by  the  governments.  Methods  and  principles  are  the  out- 
come of  political,  traditional  and  economic  conditions. 
In  contrast,  the  proposals  for  compulsory  sickness  insur- 
ance pending  in  this  country  are  wholly  the  emanations 


1" 


of  pure  theorists,  to  be  suddenly  imposed  upon  the  in- 
sured with  little  or  no  intelligent  election  or  trial  on  the 
part  of  the  latter,  individually  or  collectively. 

Third.  So  recent  has  been  the  beginning  of  the  pend- 
ing drift  to  compulsory  insurance  in  Euro-pe — it  is  in  part 
an  aftermath  of  the  war— that  it  has  been  adopted  in  only 
a  very  few  countries  long  enough  to  judge  of  its  results. 
And  those  few  countries  have  all  been  Germanic,  wherein 
the  people  are  accustomed  to  discipline  and  state  pater- 
nalism in  social  arrangements  generally.  It  is  signifi- 
cant that  where  compulsory  social  insurance  is  being  tried 
for  individualistic  peoples — in  sickness  and  disablement 
insurance  in  Great  Britain,  and  in  old  age  and  invalidity 
insurance  in  France — general  confusion  and  dissatisfac- 
tion have  promptly  resulted;  and,  although  it  is  yet  too 
early  to  draw  final  conclusions,  the  results  as  a  whole  ap- 
pear to  be  far  below  the  expectations  aroused  by  the 
predictions  of  the  authorities  who  initiated  the  measures. 

One  feature  of  European  social  insurance  in  general 
needs  to  be  mentioned  before  getting  down  to  sickness  in- 
surance in  particular.  The  earliest  and  most  easily  od- 
tainable  sources  of  information  as  to  the  operations  of 
any  social  insurance  experiment  are  the  reports  of  the 
.public  officials  who  themselves  administer  or  control  itj 
Such  reports  are  usually  more  or  less  biased  and  unduly 
favorable,  a  few  only  presenting  and  discussing  fairly  the 
defects  developed,  whereas  many  others  take  the  char- 
acter of  mere  puffery  advertisements  of  officials  or  party 
policies.  Particularly  are  these  reports  to  be  looked 
upon 'as  misleading  in  regard  to  expenses  of  operation,  as 
they  may  conceal  or  ignore  much  of  the  cost  of  adminis- 
tration and  supervision  entailed  upon  the  government 
and  especially  the  cost  of  the  involuntary  services  im- 
posed upon  employers.  Consequently  the  truth  as  to  the 
cost,  effectiveness  of  operation  or  attainment  of  the  near 
and  remote  purposes  of  these  European  experiments  can- 
not be  gained  with  certainty  from  these  sources,  but  is 
obtainable    only   by   intensive   and   critical   study   and 


10 


analysis  of  operations  in  the  respective  areas  covered. 
The  American  proponents  of  compulsory  social  insur- 
ance cannot  claim  to  have  made  any  such  study.  Con- 
sequently very  much  about  these  European  experiments, 
although  assumed  to  be  known  by  these  reformers,  is 
really  unknown  and  must  remain  uncertain  until  recog- 
nized methods  of  modern  scientific  social  investigation 
are  employed  in  the  matter. 

Certainly  much  can  be  learned  from  the  experience 
under  these  European  experiments.  Common  sense  re- 
quires first-hand  study  before  American  states  embark 
on  any  venture  along  similar  lines. 

Opportunity  to  study  European  experience  was  shut 
off  in  August,  1914,  by  the  war,  and  is  still  generally  shut 
off  by  the  disturbed  condition  of  Europe.  Moreover,  all 
experience  since  the  outbreak  of  the  war  has  been  abnor- 
mal. In  what  follows  we  base  our  tentative  conclusions 
.principally  upon  the  normal  experience  which  terminated 
August,  1914. 

The  members  of  this  Committee,  however,  have  had 
more  than  the  usual  opportunity  for  ascertaining  up-to- 
date  facts  as  to  the  general  situation  relative  to  sickness 
insurance  in  Europe.  With  respect  to  Great  Britain  the 
opportunities  have  been  especially  good. 

Two  of  our  members  have  recently  visited  that  coun- 
try. All  have  correspondents  there.  Answers  to  queries 
have  been  obtained  from  a  number  of  sources,  more  par- 
ticularly from  prominent  officials  of  some  of  the  largest 
approved  societies  of  Great  Britain.  Besides,  of  course, 
the  Committee  has  secured  the  latest  official  reports  on 
the  subject.  With  respect  to  the  continental  countries, 
considerable  information  has  been  obtained  from  dele- 
gates to  the  International  Industrial  Conference  at 
Washington. 

Turning  now  to  state  sickness  insurance  in  particular : 

In  a  later  chapter  (post,  p.  37)  is  a  table  showing 
the  state  sickness  insurance  laws  so  far  adopted  in 
Europe,  with  data  regarding  their  extension — i.  e.  the 


11 


percentage  of  the  population  covered — at  the  latest  date 
obtainable,  generally  prior  to  August,  1914. 

It  should  be  noted  that  under  few  of  those  laws  is  the 
insurance  at  all  ^  ^  universal, ' '  but  that  in  many  of  them  it 
is  limited  in  application  to  a  few  industries — ^generally 
either  to  the  highly  organized  industries,  to  which  com- 
pulsory insurance  can  most  conveniently  be  applied,  or  to 
those  industries  which  were  previously  largely  covered 
by  voluntary  insurance. 

It  is  noticeable  ,  also,  that  experience  with  so-called 
^^universaP'  compulsory  wage-workers'  insurance  has 
been  extremely  brief  and  up  to  1914  was  limited  to  Great 
Britain  and  Norway ;  that  in  Great  Britain  the  experience 
has  been  unfavorable ;  and  that  in  Norway,  so  far  as  we 
are  able  to  ascertain,  the  experience  has  never  been  criti- 
cally studied. 

From  such  studies  of  European  experience  as  we 
have  been  able  to  make,  particularly  in  Great  Britain 
and  Germany,  we  are  convinced  that: 

General  compulsory  sickness  insurance  is  hopelessly  inefficient 
for  the  prevention  of  illness. 

Medical  benefits,  appropriate  to  and  practicable  with  sickness 
insurance  of  wage-workers  cannot  be  efficient  for  the  cure  or  cor- 
rection of  such  common  ills  as  tuberculosis,  feeble  mindedness, 
congenital  defects  and  the  results  of  neglect  in  childhood. 

Maternity  benefits  are  inexpedient  and  out  of  place  in  wage- 
workers'  sickness  insurance.* 

In  compulsory  insurance  it  would  be  both  inequitable  and 
inexpedient  to  provide  benefits  for  chronic  diseases. 

Sickness  insurance  ought  not  to  apply  to  vice  diseases  or  to 
cases  of  disability  due  to  or  prolonged  by  bad  or  vicious  habits. 

The  foregoing  conclusions  narrow  the  possible  fiel< 
of  utility  for  the  medical  benefits  under  wage-workers' 
compulsory  sickness  insurance  far  within  what  is  claime( 
by  its  proponents.  And,  unfortunately,  even  within  th( 
narrow  field  remaining  the  utility  of  insured  medical 
benefits  is  doubtful. 

From  its  study  of  foreign  experience,  and  of  projects 
and  proposals  in  America  to  date,  this  Committee  is  of 

*We  are  unanimously  of  the  opinion  that  the  State  should  provide 
the  best  possible  medical  care,  etc.,  for  all  women  in  childbirth,  hut  not 
through  insurance. 


/ 


12 


the  opinion  that  no  plan  has  yet  been  devised  for  effi- 
ciently and  economically  providing  medical  attention, 
hospital  care  and  other  features  of  health  conservation, 
as  a  benefit  of  insurance  in  conjunction  with  a  cash  in- 
surance benefit  during  short  sicknesses.*  Without  going 
into  the  details  of  the  ''doctor  problem''  and  of  the 
manifold  difficulties  now  proven  to  be  involved  in  it,  it 
is  sufficient  to  note  that: 

It  is  quite  certain  and  generally  agreed  to  by  even  the  pro- 
ponents of  compulsory  sickness  insurance  that  both  the  British 
and  the  German  plans  of  dealing  with  this  problem  are  seriously 
defective.  (See  Warren  and  Sydenstricker,  "Public  Health  Bul- 
letin No.  76,"  p.  59 ;  Dr.  Alexander  Lambert,  Bulletin  No.  212,  U.  S. 
Bureau  of  Labor  Statistics,  p.  654.) 

What,  then,  is  the  alternative?  While  the  proponents  gener- 
ally agree  in  insisting  that  a  wholly  satisfactory  p'an  can  some- 
how be  devised,  yet  up  to  date  they  have  been  hopelessly  unable  to 
devise  one.  And  they  differ  among  themselves  radically  as  to  meth- 
ods and  means. 

Some  insist  that  the  insured  patients  must  have  the  right  of 
absolute  free  choice  of  physician,  whereas  others  admit  that  such 
right,  under  the  French  accident  compensation  law,  has  resulted  in 
general  demoralization,  waste  and  harm. 

Some  insist  that  the  medical  benefits  must  be  provided  by  a 
public  health  service;  whereas  others  acknowledge  that  those  who 
pay  the  bills  will  insist  upon  controlling  the  service. 

Some  insist  that  the  capitation  system  of  paying  the  doctors 
must  not  be  adopted;  whereas  others  argue  that  such  method  of 
payment  is  the  most  satisfactory  or  the  only  one  practicable. 

The  majority  of  proponents  insist  that  the  medical  benefits 
shall  be  provided  by  associations  of  large  numbers  in  relatively 
small  areas;  but  they  have  been  unable  or  at  least  have  failed  to 
specify  how  the  benefits  can  be  efficiently  and  economically  pro- 
vided for  those  persons  who  work  in  a  relatively  small  area  cov- 
ered by  an  association,  but  reside  in  another  area  or  another  State, 
or  for  those  persons  who  regularly  or  irregularly  work  in  dif- 
ferent areas. 

The  various  plans  and  bills  for  sickness  insurances  published 
or  introduced  in  legislatures  in  this  country  have  been  equally  at 
variance  on  this  point,  their  authors,  under  criticism,  shifting  sud- 
denly from  plan  to  plan,  without  having  yet  been  able  to  decide 
upon  any  one  that  will  stand  analysis. 

Until  the  proponents  of  compulsory  sickness  insur- 
ance can  devise,  formulate  and  agree  upon  some  definite 

♦The  American  Medical  Association  at  its  Convention  in  New  Or- 
leans, April  27,  1920,  with  an  attendance  of  3,800  members,  adopted 
unanimously  the  following  Resolution: 

Resolved,  that  the  American  Medical  Association  declares  its 
opposition  to  the  institution  of  any  plan  embodying  the  system  of 
compulsory  insurance  against  illness,  or  any  other  plan  of  com- 
pulsory insurance  which  provides  for  medical  service  to  be  ren- 
dered contributors  or  their  dependents,  provided,  controlled,  or 
regulated  by  any  State  or  the  Federal  Government. 


' 


^»W 


13 

plan  which,  after  fair  opportunity  for  criticism,  can  be 
accepted  by  the  majority  of  the  people  as  holding  out 
at  least  the  probability  of  providing  an  efficient  and  eco- 
nomical medical  service,  manifestly  it  would  be  wrong 
for  us  to  adopt  a  doubtful  mode  of  compulsory  insurance 
of  medical  benefits.  Until  that  is  done,  compulsory  sick- 1 
Tness  insurance  deseryea-j^aQsi deration  a^-.a.^practicable 
I  methodjorjhe^rovisionjof^^  only.  _J 

It  is  certainly  desirable  that  the  community,  collec- 
tively and  individually,  should  bestir  itself  to  reduce  the 
hardships  from  loss  of  earnings  resulting  from  ill  health. 
The  first  and  most  important  method  for  such  purpose  is 
the  prevention  of  disease,  the  second  is  the  cure  of  disease 
and  the  third  and  least  is  money  relief . 

As  regards  need  of  money  relief,  emphasis  should 
be  given  to  the  misfortunes  resulting  from  ill  health  in 
the  order  of  their  importance,  whi6h  is  usually  as  fol- 
lows : 

1.  Premature  permanent  invalidity  of  a  breadwinner. 

2.  Premature  death  of  same. 

3.  Long  sickness  of  same. 

4.  Short  sickness  of  same. 

'or  protection  against  the  first  three  misfortunes  men- 
tioned, insurance,  involving  the  accumulation  of  funds  in 
accordance  with  highly  technical  principles,  is  generally 
essential,  and  many  classes  of  workers  may  need  help  to 
provide  It.  But,  for  short  sicknesses,  insurance  is  often 
unneeded.  EelaTivelylfew  American  wage-workers  are 
unable  while  in  health  to  accumulate  savings  equal 
to  the  cash  benefit  under  state  sickness  insurance.  One's 
own  cash  in  pocket  is  more  advantageous  than  an  appeal 
to  the  state  insurance  to  provide  for  needs  during  short 
sicknesses.  And,  for  those  who  need  it,  protection  against 
the  wage  loss  from  short  sicknesses  is  provided  by  small 
fraternal  societies,  operated  on  the  current  cost  basis, 


X 


u 

without  large  reserve  accumulations,  to  be  found  in  nearly 
every  American  community. 

Moreover,  because  of  the  uncertainty  of  the  criterion 
of  the  right  to  benefit,  experience  seems  to  indicate  that 
short  sickness  insurance  can  be  administered  fairly  and 
satisfactorily  only  through  small  mutuals,  in  which  the 
members  know  each  other,  watch  each  other,  have  a  pride 
in  keeping  off  the  benefits,  and  exclude  malingerers  and 
persons  of  bad  habits.  Where  the  state  intervenes  to  in- 
terfere with  complete  liberty  of  association  and  man- 
agement, malingering  and  impositions  become  the  rule, 
bnsequently,  the  proposed  compulsory  insurance  of 
cash  benefits  during  short  sickness  would  start  in  with 
the  least  needed  branch  of  social  insurance  and  the 
branch  in  which  state  assistance  and  control  is  least 
\  needed  and  least  practicable.  This  course  may  be  chosen 
Mjecause  of  the  comparative  frequency  of  short  sicknesses, 
or  because  that  branch  of  insurance  can  be  made  most 
popularly  attractive  by  glowing  but  unsubstantiated 
promises  of  advantages  in  connection  with  dubious  med- 
ical benefits.  However  that  may  be,  a  mere  indication  of 
the  four  categories  of  misfortune  above  mentioned  is  con- 
vincing that,  so  far  as  cash^relief-4s-4n-qua^tion,  short 
sickness  insurance_comes_ia5tj  flTiH,  pnnsprp^Titly^  that 
efforts  and_^re_sojareeB--&hauldJaaj[ieY^^  to  de- 

~  velop^mg  branchesj)f  insuj;ance  .applieablB'^o'^the  other 
thjeer^  A  practical  and  methodical  program  for  the  adop- 
'tion  of  compulsory  social  insurance,  therefore,  requires 
that  sickness  insurance,  confined  to  its  proper  propor- 
tion of  the  total  practicable  cost,  should  come  in  its  order 
after  invalidity,  death  and  long  sickness  benefits  have 
been  adequately  provided  for. 

Whether  or  not  old-age  insurance  belongs  in  that 
program  or  should  be  replaced  by  old-age  pensions  is 
a  somewhat  different  question,  as  to  which  this  Committee 
expresses  no  opinion.  But  it  should  be  observed  that  in 
our  studies  of  foreign  experience  we  have  not  been  favor- 


i  i 


! 


15 

ably  impressed  with  pending  experiments  with  old-age 
pensions,  whereas  we  have  been  impressed  by  the  diffi- 
culties of  applying  similar  systems  to  the  mobile  popula- 
tion of  the  United  States  as  well  as  by  the  cost  of  pen- 
sions for  the  general  population  equaling  the  rates  of  old- 
age  benefits  paid  by  trade  unions. 

In  the  foregoing  review  nothing  has  been  said  of  un- 
employment insurance.  Experiments  in  Europe  in  that 
branch  of  social  insurance  really  as  yet  amount  to  little 
outside  of  Great  Britain.  And  we  have  not  been  favor- 
ably impressed  by  British  experience  to  date,  a  study 
of  which,  by  one  of  our  members,  follows  in  a  later 
chapter.  The  problems  involved  in  unemployment  in- 
surance, excepting  the  fundamental  questions  of  compul- 
sion and  state  subsidies,  are  quite  distinct  from  the  lines 
of  insurance  hereinabove  discussed.  This  method  of 
state  provision  for  the  necessitous  must  be  given  more 
serious  attention  and  study  before  it  can  reasonably  be 
included  in  a  platform  for  social  reform. 

From  whatever  direction  the  state  approaches  the 
problem  of  intervention  in  the  field  of  popular  insurance^ 
it  should  do  so  with  a  clear  realization  of  the  possibility  l 
or  even  probability  of  thereby  doing  more  harm  thanj 
good.     The  American   people   generally — ^wage-workers 
most  positively  included — are  capable  of  providing  for 
themselves  against  economic  misfortune  better  than  the 
state  can  do  it  for  them.    And  they  are  learning  to  do  so 
in  continually  increasing  numbers.     The  need  of  state 
intervention  for  such  purpose  can  relate  only  to  the  sub- 
merged exceptions  for  whom  generally  poor  relief  is  a 
necessary  remedy  in  misfortunes;  and  the  advantage  of 
disguising  such  poor  relief  under  the  name  of  insurance 
is  doubtful. 

But  the  prevention  of  disease  and  the  establishment 
of  means  for  adequate  and  economical  care  and  treat- 
ment of  the  sick  is  largely  a  community  problem,  to  be 


t/" 


16 


solved  by  the  state.  We,  therefore,  conclude  by  con- 
curring fully  in  the  reconunendations  in  the  statement  by 
the  Committee  on  Constructive  Plan  of  the  Social  Insur- 
ance Department  of  The  National  Civic  Federation,  a 
copy  of  which  follows  in  Appendix  A. 

j.  w.  suluvan, 
Aethur  Williams, 
P.  Tecumseh  Sherman, 
Frederick  L.  Hoffman. 


RECENT  SOCIAL  INSURANCE  EXPERIENCE  IN 

GREAT  BRITAIN  WITH  PARTICULAR 

REFERENCE  TO  SICKNESS 

INSURANCE. 

What  in  general  terms  may  be  considered  the  social 
insurance  system  of  Great  Britain  includes  at  the  pres- 
ent time,  subject  to  certain  minor  qualifications,  the  fol- 
lowing : 

(1)  Health  insurance,  which  is  divided  into  the  fol- 
lowing benefits : 

(a)  Sickness  benefit,  or  a  cash  payment  in  the 
event  of  illness  resulting  in  incapacity  for 
work  of  more  than  three  days'  duration.  The 
cash  benefit  at  the  present  time  is  10s.  a  week 
for  men  and  7s.  6d.  a  week  for  women,  not 
to  exceed  26  weeks  per  annum.  If  the  sick- 
ness is  of  longer  duration  a  disability  benefit 
goes  into  effect,  as  stated  below.  It  is  pro- 
posed to  increase  the  cash  benefit  for  men 
from  10s.  to  15s.  a  week,  and  for  women  from 
7s.  6d.  to  12s.  a  week. 

(b)  Disablement  benefit,  of  5s.  a  week  for  both  men 
and  women  during  incapacity  for  work  in  ex- 
cess of  26  weeks  duration,  and  payable  to  the 
age  of  70,  when  the  non-contributory  old-age 
pensions  go  into  effect.  This  benefit  will  be 
increased  to  7s.  6d.  under  a  bill  introduced 

^  in  the  House  of  Commons  on  March  1. 

(c)  Maternity  benefit,  providing  the  sum  of  30s., 
payable  on  the  confinement  of  an  insured  mem- 
ber's wife,  or  if  the  woman  herself  is  an  em- 
ployed contributor,  or  both.  This  benefit, 
under  the  new  law,  will  be  increased  to  40s. 

(d)  Medical  benefit,  providing  such  treatment  as  is 


17 


18 

common  to  the  practice  of  the  general  practi- 
tioner. No  important  changes  are  contemplat- 
ed in  this  respect,  although  the  benefit  falls 
very  materially  short  of  what  is  really  re- 
quired. This  benefit  has  no  value  as  a  means 
of  disease  prevention,  although  serving  a  use- 
ful purpose  in  many  cases.  It  does  not  in- 
clude surgical  or  hospital  treatment,  nor  den- 
tal treatment,  nor  auxiliary  nursing  service, 
nor  adequate  appliances  called  for  by  the 
needs  of  modern  medical  and  surgical  prac- 
tice, 
(e)  Sanatorium  benefit,  or  treatment  in  an  ap- 
proved institution,  or  domiciliary  treatment, 
including  practically  all  that  is  available  under 
the  poor  law.  It  is  proposed  under  the  new 
bill  to  remove  this  benefit  entirely  from  na- 
tional health  insurance,  it  being  recognized 
that  the  function  should  never  have  been  as- 
sumed by  the  so-called  health  insurance  sys- 
tem, being  properly  a  public  function  and 
strictly  within  the  duties  of  public  health  au- 
thorities. There  are  convincing  reasons  for 
believing  that  maternity  benefit  will  likewise, 
in  the  near  future,  be  removed  from  the  na- 
tional health  insurance  as  more  strictly  within 
the  functions  of  maternity  and  child  welfare 
centers. 

(2)  Unemployment  insurance.  Under  the  original 
act  this  provided  for  a  cash  benefit,  in  the  event  of  invol- 
untary unemployment,  of  7s.  a  week  for  both  men  and 
women.  Under  the  revised  law  of  December  25,  1919, 
this  benefit  was  increased  to  lis.  It  is  now  proposed  to 
increase  the  amount  payable  to  15s.  for  men  and  12s.  for 
women.  It  is  also  proposed  to  very  largely  increase  the 
number  of  persons  insured.  There  is  widespread  dis- 
satisfaction with  the  proposed  changes,  which  are  gov- 


19 

emed  largely  by  the  disastrous  consequences  of  the  ill- 
advised  out-of-work  donations.  The  latter  are  much 
more  liberal  than  the  former,  furnishing  another  perni- 
cious illustration  that  more  may  be  receivable  under  a 
liberal  policy  of  government  aid  than  under  a  rational 
theory  of  thrift  and  mutual  aid.  (The  out-of-work  dona- 
tion at  the  end  of  1919  was  20s.  a  week  for  men  and  15s. 
for  women,  and  in  addition  allowances  are  granted  to 
children,  which  may  raise  the  average  to  as  much  as  30s. 
for  men,  more  or  less.  In  contrast,  the  payment  under 
unemployment  insurance  is  lis.  a  week,  and  under  sick- 
ness insurance  10s.,  subject,  of  course,  to  modifications.) 

(3)  Non-contributory  old-age  pensions.  The  original 
rate  of  old-age  pensions  was  5s.  a  week  on  attaining  the 
age  of  70,  but  this  amount  was  increased  by  war  dona- 
tions and,  subject  to,  income  restrictions,  will  now  prob- 
ably average  7s.  6d.  Under  the  new  law  this  will  be 
increased  to  10s.  a  week,  while  the  range  of  persons  eli- 
gible has  also  been  increasred. 

The  Committee  has,  of  necessity,  limited  its  investiga- 
tions to  the  health  insurance.  A  study  of  the  unemploy- 
ment insurance,  made  by  one  of  its  members,  is  reported 
in  a  later  chapter. 

In  the  early  summer  of  1914  this  Committee,  with  the 
exception  of  one  member  who  has  since  been  added,  made 
an  intensive  study  of  the  operations  of  the  British  health 
insurance,  unfortunately  terminated  prematurely  by  the 
outbreak  of  the  war,  as  set  forth  in  a  report  entitled 
**Eeport  of  the  Committee  on  Preliminary  Foreign  In- 
quiry, Social  Insurance  Department,  The  National  Civic 
Federation,''  dated  November,  1914.  In  that  report  we 
explained  in  detail  the  various  features  of  the  National 
Health  Insurance  Act  and  the  methods  of  administering 
the  insurance,  and  criticized  the  financial  scheme  of  the 
act  and  the  actuarial  calculations  upon  which  it  was 
based,  the  character  of  the  general  administration,  the 
expense,  the  character  and  administration  of  the  medical 


20 

benefit,  the  provisions  for  sanatorium  and  maternity 
benefits,  the  provisions  for  casual  and  itinerant  laborers, 
the  position  of  the  deposit  contributors,  the  failure  of  the 
plan  for  voluntary  contributors,  etc.,  and  concluded  that 
final  judgment  would  have  to  be  suspended,  pending  fur- 
ther experience,  but  that  our  impression  was  most  un- 
favorable, and  that  the  prospects  were  gloomy  both  for 
the  taxpayers  and  the  insured.  For  information  covered 
by  that  report  we  refer  the  reader  thereto.  Here  we 
propose  to  set  forth  only  the  information  as  to  later  ex- 
perience under  that  act,  obtained  upon  our  recent  inves- 
tigations and  inquiries. 

Practically  everybody  in  England  is  now  thoroughly 
dissatisfied  with  the  health  insurance  and  is  demanding 
radical  changes.  But  the  causes  of  dissatisfaction  vary 
among  the  different  classes  affected;  and  the  amend- 
ments demanded  are  correspondingly  various,  and  are 
somewhat  contradictory. 

Taking  up  first  the  attitude  of  labor,  more  particu- 
larly of  organized  labor : 

At  the  annual  conference  of  the  National  Association 
of  Trade  Union  Approved  Societies,  February  3  and  4, 
1920,  the  president's  address  was  delivered  by  S.  San- 
derson, Secretary  of  the  Lancashire  Cardroom  Workers' 
Approved  Society.  The  points  in  the  address  which  bear 
directly  on  the  subjects  of  the  investigation  of  this  Com- 
mittee are  given  below. 

The  language  employed  by  Mr.  Sanderson  shows 
clearly  that  he  agrees  to  a  remarkable  degree  with  the 
main  conclusions  of  this  Committee  in  its  Preliminary 
Eeport.  In  fact,  such  is  the  force  of  his  statements, 
based  upon  an  intimate  official  experience  with  the  Brit- 
ish health  insurance,  that  standing  alone  they  ought  to  be 
sufficient  to  call  a  halt  in  the  sickness  insurance  propa- 
ganda which  we  are  now  witnessing  in  the  United  States. 
He  emphasizes  every  fault  in  British  health  insurance 
pointed  out  by  us  six  years  ago,  and  likewise  he  justifies 


21 


all  our  criticisms  and  all  our  doubts  as  to  the  successful 
working  of  this  British  system.    His  statements  follow: 

"We  have  now  eighty  four  bona  fide  trade  union  societies  with 
an  aggregate  membership  approaching  one  million. 

"Our  object  is  to  secure  a  higher  standard  of  health  for  the  work- 
ers. We  are  fighting  for  the  right  of  every  man,  woman,  and  child 
to  live  a  full  and  healthy  life. 

"We  may  derive  satisfaction  from  the  fact  that  the  demands 
made  tipon  the  physical  endurance  and  health  of  the  people  by  war 
conditions  has  emphasized  the  vital  importance  of  national  health, 
and  has  convinced  public  opinion  of  the  imperative  necessity  of 
everything  possible  being  done  to  protect  and  develop  this  great 
national  asset. 

"The  present  social  unrest  is  the  fruit  of  neglect  of  first  prm- 
ciples,  of  faulty  statesmanship,  of  imperfect  knowledge  of  economic 
science,  of  political  stupidity,  and  of  financial  wickedness  in  high 
places.  In  the  coming  years  the  need  of  the  community  will  be 
as  much  in  the  realm  of  spiritual  and  moral  recuperation  as  in 
economics 

"Our  educational  ideal  wants  remodelling.  The  tale  of  infantile 
mortality,  the  scourge  of  tuberculosis,  the  figures  of  army  examina- 
tions, the  devastation  of  epidemics,  point  emphatically  and  con- 
clusively to  the  preventable  wastage  of  life.  Hygiene,  sanitation, 
and  education  have  modified  many  diseases,  but  a  great  deal  yet 
remains  to  be  done.  It  will  be  a  poor  acknowledgment  of  the  noble 
services  of  those  w.ho  have  fallen  in  the  war  if  the  lesson  which  the 
war  was  meant  to  teach  is  not  learned,  and  if  we  miss  the  great 
opportunity  of  inaugurating  human  well-being,  which  they  made 
possible  by  the  sacrifice  of  their  lives. 

"Amongst  the  first  duties  of  reconstruction  is  to  give  a  reason- 
able chance  to  every  man,  woman  and  child  to  live  a  full  and 
healthy  life.  Unless  this  is  first  secured  all  other  efforts  for  the 
advancement  and  well-being  of  the  people  will  be  futile.  The  ap- 
palling wastage  of  human  life  is  the  greatest  disgrace  to  English 
statesmanship. 

"The  efficiency,  the  health,  and  happiness  of  every  unit  is  the 
greatest  national  asset,  and  the  ever-increasing  number  of  unfits 
constitutes  an  ever-increasing  charge  upon  the  national  resources. 
The  crippling  of  every  worker  afflicts  the  State  not  only  in  the  cost 
of  his  maintenance,  but  in  the  sacrifice  of  his  productive  powers. 

"I  would  point  out  that  the  Government  have  a  committee  sitting 
to  inquire  into  the  working  of  industrial  insurance.  There  is  also 
a  committee  sitting  on  the  Workmen's  Compensation  Act  to  con- 
sider whether  it  would  be  advisable  to  establish  a  system  of  acci- 
dent insurance  under  the  control  and  supervision  of  the  State. 
Already  we  have  a  State  scheme  for  sickness  and  another  scheme 
•  in  a  Bill  for  unemployment.  I  deem  it  my  duty  to  warn  the  workH 
ers  to  walk  warily  in  these  new  paths  and  to  carefully  test  the  * 
various  economic  doctrines  which  are  being  so  freely  enunciated  at 
the  present  time.  Insurance  founded  upon  mutual  association  and 
Government  co-operation  ought  to  supplement  public  charity  and 
private  relief  to  a  greater  extent.  An  organized  system  against 
sickness,  against  loss  of  employment,  against  the  untimely  death 
of  the  head  of  the  family,  and  against  all  those  misfortunes  to 
which  the  workers  are  exposed,  will  certainly  result  in  the  sup- 
pression of  almost  all  the  economic  causes  of  poverty. 

"There  are  five  possible  misfortunes  to  which  the  worker  are 
constantly  exposed  and  which  render  him  liable  to  cease  work 
either  permanently  or  temporarily,  and  thereby  expose  him  and  his 
family  to  hardship  and  misery.    These  misfortunes  are  illness,  loss 


22 


of  employment,  accident,  old  age  and  death.  The  first  question  that 
naturally  arises  is  as  to  whether  a  scheme  to  cover  all  those  con- 
tingencies should  be  obligatory  or  optional.  The  plan  of  optional 
insurance,  while,  of  course,  more  in  keeping  with  the  principle  of 
liberty  and,  in  addition,  less  vexatious  and  less  burdensome,  would, 
I  fear,  only  cover  a  small  part  of  the  population  in  view  of  the 
widespread  improvidence  of  mankind  in  general.  If  the  working 
classes  of  this  country  could  only  be  prevailed  upon  to  join  the 
trade  union  movement  in  their  entirety  and  trade  unions  would 
cater  to  meet  these  misfortunes,  a  scheme  of  insurance  could  be 
worked  at  one-tenth  the  cost  of  a  state  scheme,  and  link  up  labor 
and  capital  in  such  a  way  as  to  lessen  the  possibility  of  hardship 
arising  from  any  of  these  misfortunes. 

"We  are  all,  I  fear,  apt  to  forget  that  the  money  to  provide  what 
are  erroneously  called  'free  state  benefits*  does  not  spring  from  no- 
where. Whatever  is  provided  by  the  state  has  to  be  paid  for  in 
taxes,  and  nothing  can  be  done  by  the  state  which  is  not  paid  for 
by  the  individual. 

"What  happens  over  and  over  again?  An  agitation  is  started  to 
get  the  state  to  do  something.  It  grows  in  strength  and  purpose. 
The  doing  of  it  requires  the  passing  of  some  new  law.  It  always 
requires  the  appointment  of  oflBcials  to  carry  out  the  new  work, 
and  not  infrequently  a  whole  new  department  is  started.  It  is  like 
starting  a  new  toy  locomotive  with  a  driver  at  £5,000  a  year,  a 
stoker  at  £1,500,  and  hundreds  of  assistants  at  big  salaries.  It  is 
started  off,  turns  a  corner,  gets  out  of  sight,  breaks  down,  and  is 
forgotten  with  little  good  to  anyone  except  the  officials  who  go  on 
drawing  their  salaries.  The  legislative  past  is  like  an  iron-bound 
coast  strewn  with  wrecks;  as,  for  instance,  the  Poor  Law,  which 
is  hated  and  detested  by  the  poor,  for  out  of  every  £1  spent  14s. 
goes  in  administration.  The  Unemployment  dole,  which  cosi  an 
extra  £2  in  administration  for  every  £1  paid  in  unemployment, 
while  those  white  elephants  called  labour  exchanges,  which  find 
employment  largely  for  their  own  officials,  and  even  national 
health  insurance,  which  is  costing  5s.  to  give  a  sick  man  10s.  In 
my  view  the  state  has  messed  and  muddled  everything  it  has 
touched. 

"There  is  no  real  democratic  control  over  state  schemes.  Take 
the  Advisory  Boards  of  the  Ministry  of  Health.  Dr.  Addison  ap- 
points and  drops  the  members  as  he  chooses,  and  their  function 
is  advice  only.  They  are  independent  of  the  insured  population. 
Whatever  the  faults  of  trade  unions — and  they  are  many — they 
are  at  least  controlled  by  the  members. 

"The  outstanding  feature  of  state  schemes  is  the  prodigious  cost 
of  administration.  We  in  this  conference  have  for  years  been  say- 
ing that  it  is  a  scandal  the  benefits  have  not  been  increased.  Even 
when  we  have  convinced  our  members  and  our  employers  that 
contributions  have  to  be  increased  to  pay  increased  benefits  we 
have  to  wait  until  that  opinion  is  generally  held  all  over  the  coun- 
try before  we  can  move.  The  fact  is  that  the  state  is  taking  upon 
itself  functions  which  it  was  never  intended  to  discharge  and  which 
are  alien  to  its  nature.  State  ownership  should  not  be  introduced 
where  state  control  suffices,  while  state  control  should  not  be  ap- 
plied any  more  than  is  necessary. 

"In  my  view  social  insurance  is  no  substitute  for  wages  and 
the  state  should  confine  itself  to  encouraging  and  supporting  the 
individual  and  the  family  to  voluntarily  engage  in  corporate  action 
in  order  to  safeguard  themselves  with  the  assistance  of  their  em- 
ployers against  sickness,  accident,  invalidity,  unemployment,  and 
old  age,  and  to  render  the  financial  assistance  where  the  assistance 
is  required.  Otherwise  we  are  on  an  inclined  plane  at  the  bottom 
of  which  we  shall  ultimately  find  the  individual  and  the  family 


23 

groaning  under  state  absolutism.  The  position  can  be  bovrilised 
as  follows:  A  certain  school  of  thought  want  to  give  the  workers 
social  insurance  to  supplant  a  living  wage.  The  trade  union  move- 
ment must  stand  first  for  a  living  wage  and  that  social  insurance 
be  regarded  as  supplementary  and  not  supplanting  that  living  wage. 

"Social  insurance  will  relieve  distress,  but  does  not  try  to  re- 
move its  cause.  Trade  unionism  has  for  its  aim  the  prevention 
of  destitution,  and  if  it  can  succeed,  as  it  surely  will,  to  obtain 
for  the  workers  a  fair  share  of  the  wealth  produced  in  the  way  of 
adequate  wages,  it  will  go  a  long  way  toward  the  end  and  the  need 
of  State  assistance  will  be  so  much  less.  A  trade  union  can  and 
should  provide  all  the  necessary  benefits  to  keep  their  members 
in  times  of  distress  without  subjecting  the  workers  to  bureau- 
cratic control,  both  tyrannical  and  inefficient,  which  characterises 
all  state  schemes. 

"Take  the  question  of  medical  benefit  under  the  Insurance  Act. 
I  want  to  remind  the  conference  that  it  was  originally  intended 
that  a  full  and  adequate  medical  service  would  be  provided.  Mr. 
Lloyd  George  said  he  wanted  the  poor  man  to  have  the  same  treat- 
ment as  a  rich  man,  but  in  practice  this  ideal  treatment  is  dimin- 
ished to  treatment  which  can  properly  be  undertaken  by  a  gen- 
eral practitioner  of  ordinary  professional  competence  and  skill. 

"Insured  persons  are  not  receiving  the  treatment  they  were  led 
to  expect,  because,  instead  of  the  standard  of  treatment  being  that 
within  the  competence  of  the  average  practitioner  it  has  been  re- 
duced to  the  minimum  standard  of  any  practitioner.  We  have 
standardised  mediocre  practice.  Not  only  that,  we  are  paying  mil- 
lions of  pounds  for  what  is  least  needed.  There  is  no  provision  for 
,  any  kind  of  specialist  treatment,  for  operations,  and  for  the  very 
things  most  needed  by  the  workers.  So  incomplete  is  medical  bene- 
fit that  but  for  the  assistance  given  by  the  great  voluntary  hospitals 
many  of  the  most  serious  ailments  of  insured  persons  would  have 
to  go  without  adequate  treatment  altogether.  Whilst  the  panel  doc- 
tor has  only  to  deal  with  the  more  simple  ailments  where  we  could 
almost  do  without  him,  their  lightning  treatment  of  symptoms 
has  degenerated  largely  into  mere  drug-peddling,  with  the  result 
that  panel  treatment  and  panel  physic  is  regarded  by  not  a  few 
insured  persons  with  something  of  the  same  abhorrence  as  pauper 
relief. 

"The  healing  art  of  the  future  should  be  in  the  discovery  of  the 
beginnings  of  diseases  and  the  elimination  of  their  causes. 

"With  regard  to  sanatorium  benefit,  everybody  admits  it  has 
been  a  failure  and  will  continue  to  be  until  we  concentrate  our  at- 
tention on  the  prevention  of  consumption  rather  than  on  the  cure, 
and  one  might  safely  say  that  the  satisfactory  solution  of  the  prob- 
lem of  the  elimination  of  consumption  involves  the  solution  of 
most  of  the  illnesses  of  our  times. 

"If  we  can  make  our  country  what  a  community  of  civilized 
men  and  women  ought  to  be,  if  we  abolish  our  dreadful  slums,  if 
we  can  free  its  people  from  the  evil  conditions  both  in  the  work- 
shops and  the  supposed  homes,  if  we  can  eradicate  everything  that 
causes  needless  sickness  and  disease,  it  will  be  a  monument  more 
precious  than  gold  and  more  enduring  than  marble." 

To  similar  effect  the  following  editorial  appeared  in 
the  ** Democrat^'  of  July  25,  1919,  of  which  Mr.  W.  A. 
Appleton,  Secretary  of  the  General  Federation  of  Trade 
Unions,  is  editor: 


/ 


24 


"We  must  always  take  into  consideration  that  any  forced  condi- 
tions upon  the  workers  must  have  a  tendency  to  create  revolt. 
Compulsory  health  insurance  has  not  improved  the  working  portion 
of  the  community,  nor  materially  raised  the  standard  of  public 
health. 

"All  the  more  conspicuous  and  gratifying  results  in  the  improve- 
ment of  social  conditions,  the  lowering  of  the  death  rate,  the  grad- 
ual elimination  of  preventable  diseases,  etc.,  were  secured  more 
effectively  in  this  country  and  entirely  without  compulsory  in- 
surance." 

The  foregoing  represent  opinions  quite  widespread 
among  British  labor.  But  the  majority  opinion  of  the 
working  people,  probably,  is  not  quite  so  unfavorable  to 
the  health  insurance.  We  are  told  that  while  they  are 
extremely  dissatisfied  with  the  administration  of  the  law 
and  with  the  amounts  of  the  benefits,  yet  that  they  desire 
to  hold  on  to  the  benefits  the  law  promises  them.  To  com- 
prehend the  situation  from  their  viewpoint  it  should  be 
realized  that  the  National  Health  Insurance  includes 
really  two  branches  of  insurance,  first,  sickness  insur- 
ance, which  aims  to  provide  medical,  sanatorium  and 
maternity  benefits  and  **sick  pay''  during  short  illnesses; 
and,  second,  disablement  insurance,  which  aims  to  pro- 
vide a  cash  benefit,  of  about  one-half  the  rate  of  the  ^*sick 
pay,''  during  long  or  permanent  disablilities — up  to  the 
age  of  70,  when  the  old  age  pension  begins.  With  its 
amendments  the  health  insurance  act  has  had  the  effect 
of  a  free  donation  by  the  government  to  the  working 
people  of  disablement  insurance  fully  paid  up  to  the  date 
when  the  act  took  effect,  the  value  of  such  donation  being 
variously  estimated  around  £90,000,000.  To  the  older 
workmen,  especially  benefited  by  this  arrangement,  since 
they  have  obtained  the  insurance  without  equivalent  pay- 
ments of  dues,  and  who  have  been  struggling  through  life 
with  bitterly  low  wages,  this  donation  was  a  godsend. 
Naturally  it  has  created  among  them  a  certain  spirit  of 
friendliness  to  the  act.  But  it  should  be  borne  in  mind 
that  this  friendliness  is  due  to  the  disablement  insurance 
features  of  the  act  rather  than  to  the  sickness  insurance 
features.    And  it  is  sickness  insurance  which  is  being 


\ 


■i 


25 

proposed  in  the  United  States  and  with  which  Americans 
are  more  immediately  concerned. 

In  our  Preliminary  Report  above  referred  to  (p.  41) 
it  was  stated  to  be  probable  that  the  cost  of  the  disable- 
ment insurance  may  exceed  the  estimate  and  the  income 
provided  **two  or  three  times."  We  are  now  informed 
that  the  expenditures  for  disablement  benefit  are  con- 
sistently rising  each  year,  and  that  there  are  some 
grounds  for  the  dread  that  the  estimate  will  be  exceeded 
two  or  three  times.  As  yet,  however,  no  valuation  of  the 
assets  and  liabilities  of  the  various  insurance  carriers  has 
been  made.  Thus  after  nearly  six  years '  experience  (the 
disablement  insurance  took  effect  in  1914)  the  uncertainty 
of  the  plan  for  financing  the  disablement  insurance  and 
the  possibility  of  a  deficit  on  that  score  of  some  hundreds 
of  millions  of  pounds  in  the  course  of  a  generation,  a 
burden  of  which  the  working  people  must  bear  at  least 
their  full  share,  remain  as  great  as  ever.  These  facts 
should  be  borne  in  mind  in  connection  with  the  demands 
for  increasing  all  the  benefits  without  any  definite  plan 
for  financing  such  increases. 

This  financial  uncertainty  is  aggravated  by  the  fact 
that  no  progress  has  been  made  toward  defining  the 
qualification  for  the  disablement  benefit — i.e.,  what  is 
meant  by  *  incapable  of  work."  This  qualification  is 
carefully  defined  in  the  German  and  French  laws;  but 
in  England  it  seems  to  be  the  policy  for  administrators 
to  make  up  their  minds  as  they  go  along  as  to  what  the 
law  means.  It  should  be  noted  that  the  exact  definition 
to  be  given  to  this  qualification  will  affect  the  cost  of  the 
disablement  benefit  and  the  value  of  the  insurance  to 
the  workers  enormously. 

Eeturning  from  this  digression,  the  following  are  the 
prevailing  opinions  among  the  workers  in  regard  to  va- 
rious features  of  the  health  insurance,  as  reported  from 
a  number  of  trade  union  sources,  with  occasional  com- 
ments thereon. 


2^ 

Medical  Benefit.  It  seems  to  be  the  prevailing  opin- 
ion among  the  workers  that  the  medical  service  provided 
is  better  than  none  at  all,  and  that  before  the  act  many 
low  income  workers  obtained  no  medical  care  worthy  of 
the  name.  But  there  is  general  dissatisfaction  with  the 
medical  service,  both  for  its  omission  of  all  specialized 
treatments  and  with  the  way  it  is  administered.  It  is  said : 
**The  medical  benefit,  as  provided,  is  not  an  evil.  The 
evil  lies  in  the  way  in  which  it  is  administered  by  the 
doctors.*' 

It  is  complained  in  the  representative  labor  press  that 
insured  patients  do  not  receive  from  the  panel  doctors  the 
attention  that  they  used  to  receive  from  their  club  doctors 
or  that  pay  patients  receive  "from  doctors  in  general 
practice.  Kef  erring  to  the  influenza  epidemic,  the  ^^Ped- 
erationist,''  (Journal  of  the  British  General  Federation 
of  Trade  Unions),  March  19, 1919,  said: 

"The  lot  of  the  panel  patient  has  never  been  a  very  happy  one. 
To-day  it  is  tragic.  .  .  .  Any  one  going  the  rounds  of  the  sur- 
geries in  the  poorer  class  districts  will  find  many  of  them  over- 
crowded with  patients  who  have  to  wait  two,  three  and  four  hours 
for  attention.  The  immediate  result  is  to  drive  the  busy  patient  or 
the  patient  who  objects  to  waiting  in  a  germ  impregnated  atmos- 
phere to  the  chemist's  shop  for  ready-made  remedies  that  may  or 
may  not  be  suitable  for  his  complaint.  The  exploitation  of  the  panel 
patient  is  a  scandal  and  those  responsible  for  it  ought  to  be  in- 
dicted." 

In  the  London  ** Democrat,"  February  6,  1920, 
*'A.  T."  who  conducts  the  trade  union  page,  wrote: 

"It  has  been  often  stated  that  the  workers  did  not  receive  that 
quality  of  medical  care  and  attention  under  the  National  Insurance 
Act  that  they  had  the  right  to  expect.  This  has  been  further  con- 
firmed by  the  deputation  from  the  Federation  of  Medical  and  Allied 
Societies  that  recently  waited  upon  the  Minister  of  Health.  This 
federation  is  of  the  opinion  that  the  present  basis  upon  which  the 
medical  profession  gives  its  services  does  not  provide  a  proper 
guarantee  for  good  medical  service,  and  they  ask  for  a  full  inquiry, 
and  a  public  one  at  that.  What  estimation  the  profession  have  of 
the  present  act  is  given  in  the  statement  of  Dr.  Arthur  Latham, 
who  stated  that  'the  insured  public  asked  for  bread  and  were  given 
a  stone.' " 

H  A  general  demand  among  the  insured  is  for  a  greater 
land  an  improved  service.  The  medical  profession  is  in 
'  accord  with  this  demand ;  but  there  is  wide  divergence  of 


V 


27 

interest  and  opinion  over  the  charge  for  such  increased 
and  improved  service. 

The  feeling  among  the  workers  is  that  the  doctors 
have  greatly  benefited  by  the  insurance  act — that  the 
act  has  automatically  strengthened  their  organization  and 
enabled  them  to  bargain  with  the  state  for  their  own 
advantage,  and  that  they  are  now  well  paid  for  their 
services.  In  a  plan,  referred  to  as  under  consideration  by 
the  government  for  an  improved  service,  the  panel 
doctors'  per  capita  fee  is  proposed  to  be  raised  from 
seven  shillings  six  .pence  to  eleven  shillings,  whereas  the 
doctors  are  demanding  thirteen  shillings  six  pence.  Con- 
sequently the  outlook  is  dark  for  any  mutually  satis- 
factory agreement  between  these  opposing  interests  or 
for  any  material  improvement  in  service  simply  by  in- 
creasing the  doctor's  fee.  For  that  purpose  it  is  neces- 
sary to  make  some  radical  change  in  the  administration 
of  the  medical  benefit. 

The  primary  difficulty  with  the  administration  of  the^"^ 
medical  benefit  under  the  act  is  that  the  **  approved  socie- 
ties,'' which  have  to  pay  the  cost,  have  no  control  over 
that  benefit,  which  is  administered  by  local  public  bodies 
and  no  control  over  the  doctors  who  certify  to  the  righ 
to  the  cash  benefit.  It  was  proposed,  and  some  steps  were 
taken  for  the  purpose  just  before  the  outbreak  of  the  war, 
to  remedy  the  latter  fault  by  the  appointment  by  the 
approved  societies  of  medical  referees.  (It  has  been 
stated  in  this  country  that  such  measure  has  been  *' suc- 
cessful.") But,  with  a  few  exceptions,  the  plan  was 
dropped  at  the  outbreak  of  the  war.  Now,  as  a  way  out 
of  the  present  unsatisfactory  arrangement  two  plans  are 
being  proposed:  (1)  That  a  public  medical  service  be 
substituted  for  the  present  insured  medical  benefits,  (pre- 
sumptively leaving  the  cash  benefit  to  be  administered  as 
at  present).  (2)  That  the  state  take  over  the  whole  in- 
surance scheme,  displacing  the  approved  societies,  and 
administer  all  the  benefits,  nationally  and  locally.  Each 
of  these  plans  is  presented  as  a  sure  solution  of  the 


U 


i 


28 

problem.  But  manifestly  the  situation  up  to  date  is  that 
the  medical  benefit  has  been  a  serious  and  expensive  fail- 
ure and  disappointment,  and  that  there  is  disagreement 
and  uncertainty  as  to  how  it  can  be  improved. 

Maternity  Benefit.  It  seems  to  be  generally  agreed 
that  the  maternity  benefit  has  been  largely  appropriated 
by  the  doctor  or  midwife  by  increased  charges  for  the 
same  service  as  before  the  days  of  insurance,  and  that 
this  benefit  has  had  no  appreciable  effect  in  diminishing 
infant  mortality.  Proposals  to  remove  the  maternity 
benefit  from  the  insurance  are  regarded  by  the  labor 
representatives  with  equanimity,  with  the  probable  reser- 
vation that  some  provision  be  made  by  the  state  to  replace 
it 

Sanatorium  Benefit.  The  opinion  of  labor  is  that,  all 
things  considered,  this  benefit  can  hardly  be  described  as 
a  success  either  from  an  administrative  or  preventive 
point  of  view.  A  very  enlightening  exposition  of  the 
operations  of  this  benefit  is  contained  in  an  address  pub- 
lished in  the  ** National  Insurance  Gazette''  of  September 
13,  20,  and  27,  1919.  What  the  sanatorium  benefit  has 
done,  and  has  not  done,  as  set  forth  therein,  may  be  sum- 
marized as  follows:  On  the  one  hand,  it  has  increased 
the  accommodations  available  for  institutional  treatment 
of  tuberculosis ;  it  has  stimulated  the  local  health  authori- 
ties to  widen  the  scope  of  their  operations  in  connection 
with  the  treatment  of  the  disease;  it  has  contributed 
largely  to  bring  about  the  establishment  of  a  central  body 
to  control  all  health  matters  in  a  *  *  Ministry  of  Health ; '  * 
it  has  discovered  that  sanatorium  treatment  is  only  part 
of  the  treatment  necessary  for  tuberculosis  cases;  and 
it  has  shown  that  the  health  insurance  funds  are  totally 
inadequate  for  dealing  effectively  with  the  problem  of 
treating  tuberculosis.  On  the  other  hand,  it  has  failed  to 
provide  adequate  treatment  for  advanced  cases;  it  has 
not  provided  a  common  channel  through  which  all  dis- 
eases shall  pass ;  it  has  not  provided  for  nor  secured  the 


\ 


29 

earlier  notification  of  the  disease ;  it  has  resulted  in  a  lack 
of  co-ordination  in  the  measures  taken  for  the  preven- 
tion and  cure  of  the  disease ;  and  it  provides  a  treatment 
radically  inefficient  for  the  cure  of  the  disease. 

Noting  that  the  increased  acconamodations  mentioned 
have  been  provided  principally  by  the  poor  law  authori- 
ties or  by  Parliamentary  *' grants  in  aid'',  outside  the 
act,  that  the  alleged  discovery  that  sanatorium  treat- 
ment is  only  part  of  the  treatment  for  tuberculosis  was 
no  '* discovery"  at  all,  the  fact  being  well  known  long 
before,  and  that  the  principal  points  credited  to  the 
sanatorium  benefit  in  the  above  resume  are  simply  revela- 
tions of  or  reactions  from  its  faults  and  deficiencies,  the 
conclusion  is  unavoidable  that  the  way  to  deal  with  the 
tuberculosis  problem  is  for  the  state  to  provide  directly 
for  the  proper  and  adequate  care  of  tuberculosis  patients, 
instead  of  going  through  the  preliminary  step  of  attempt- 
ing but  failing  to  provide  such  care  indirectly  through 
insurance.  And  it  is  difficult  to  see  why  this  conclusion 
does  not  apply  to  many  other  diseases  which  may  possi- 
bly be  eradicated  by  direct  action. 

It  is  now  proposed  that  the  sanatorium  benefit  be 
taken  out  of  the  Act  entirely. 

The  Cash  Benefit  {''Sick  Pay'').  It  seems  to  be  the 
prevailing  opinion  that  the  cost  of  the  cash  benefit,  gener- 
ally, promises  to  keep  within  the  income.  But  conditions 
are  uncertain.  Experience  during  the  war  has  been  ab- 
normal. No  valuation  has  yet  been  made.  The  cost  for 
women  seems  to  be  exceeding  the  income ;  but  the  deficit 
is  being  supplied  by  grants  in  aid  by  the  State.  The  ten- 
dency seems  to  be  in  the  direction  of  treating  the  funds 
of  all  the  approved  societies  as  a  unit,  so  that  deficits  in 
some  will  not  matter  if  offset  by  surpluses  in  others. 
But  there  is  general  dissatisfaction  with  the  amount  of 
the  cash  benefit,  not  unnatural  in  view  of  the  rise  in  wages 
and  prices,  and  a  general  agreement  that  the  amount 
shall  be  increased  substantially,  and  the  cost  be  met  by 


30 

increased  contributions.    As  to  the  distribution  of  the 
increased  cost,  however,  there  is  ominous  reticence. 

Deposit  Contributors.  Nothing  has  been  done  to  im- 
prove the  much  criticized  arrangements  for  the  deposit 
contributors,  i.  e.  those  involuntary  contributors  who  have 
not  obtained  admission  into  any  *' approved  society*'  and 
who  are  insured  only  to  the  extent  of  their  individual  con- 
tributions. But  the  number  of  these  unfortunates,  it 
is  reported,  has  been  reduced  from  489,757  in  1913  to 
268,000  in  1916. 

Casual  Labor,  So  far  as  can  be  ascertained,  the  diffi- 
culty of  collecting  the  contributions  for  the  casual  la- 
borers remains  unsolved.  Complex  schemes  for  dealing 
with  this  problem  were  evolved  before  the  outbreak  of 
the  war  and  a  plan  to  reduce  the  evil  of  casual  labor  has 
recently  been  accepted  for  the  Port  of  London,  but  noth- 
ing has  yet  been  actually  accomplished,  except  in  the  Liv- 
erpool Dock  scheme,  organized  1912-13;  (for  particulars 
of  which,  see  '*The  First  Year's  Working  of  the  Liver- 
pool Dock  Scheme",  by  R.  WilHams,  London,  P.  S.  King 
&Son,  19U). 

Malingering.  It  is  acknowledged  that  there  is  already 
considerable  malingering.  In  one  test  investigation,  as 
our  informant  puts  it,  out  of  150  persons  '*on  the  cash 
benefit,''  45  returned  to  work  rather  than  face  the  medical 
referee,  49  were  declared  fit  for  work,  and  only  51  were 
found  really  disqualified  for  work.  It  is  claimed  that  this 
rate  of  malingering  should  be  regarded  as  abnormal ;  but 
why  it  should  be  so  regarded  is  not  stated. 

General  Administration.  It  is  admitted  that  the  insur- 
ance has  been  unpopular  among  the  workers,  particularly 
up  to  the  end  of  1914.  Thousands  were  unable  to  obtain 
their  benefits,  and  the  administration  was  so  involved  that 
the  approved  societies  could  not  handle  their  work.  Since 
then,  however,  we  are  told  administration  has  been  some- 
what simplified,  travelers'  cards  have  been  improved, 


31 


4k 


and  the  rules  have  been  so  liberalized  that  fewer  of  the 
insured  are  **out  of  benefit." 

Voluntary  Contributors.  No  statistics  are  obtainable 
of  the  number  of  the  voluntarily  insured.  In  the  Gen- 
eral Federation  of  Trade  Unions'  Approved  Society,  out 
of  110,000  contributors  only  50  are  voluntary.  But  there 
is  no  doubt  that  voluntary  insurance  under  the  act  has 
proved  a  complete  failure.  Bearing  in  mind  that  the 
state  pays  about  28%  of  the  cost  of  the  insurance,  so  that 
a  voluntary  contributor  would  get  this  insurance  at  that 
rate  below  cost,  this  condition  is  indicative  of  a  low  esti- 
mate of  the  insurance  by  the  higher  grade  employees, 
many  of  whom  have  yearly  wages  just  above  the  amount 
fixed  by  the  law  below  which  the  insurance  is  compulsory.* 

Act  of  1918.  This  act  makes  some  financial  adjust- 
ments in  the  insurance  scheme,  but  its  most  noticeable 
feature  is  to  create  a  Ministry  of  Health  to  co-ordinate  the 
various  health  agencies  of  the  state,  which  are  now  in  a 
state  of  chaotic  confusion.  Information  in  this  regard 
from  a  responsible  authority  is  as  follows : 

"The  general  opinion  is  that  the  Ministry  of  Health  was  created 
for  the  purpose  of  co-ordinating  and  improving  the  activities  of  the 
various  health  organizations.  The  late  Lord  Rhondda  was  largely 
responsible  for  its  creation.  The  necessity  for  co-ordination  is 
clearly  shown  in  the  pamphlet  on  'The  Present  Problem  and  the 
Ministry  of  Health,'  issued  by  the  Ministry  of  Reconstruction,  and 
from  which  the  following  is  quoted:  'Although  provision  is  made 
generally  for  the  tuberculous  members  of  the  population  at  large, 
separate  provision  is  made  through  separate  authorities  for  tuber' 
culous  school-children,  tuberculous  paupers,  tuberculous  disabled 
soldiers  and  sailors,  tuberculous  insured  persons  and  tuberculous 
dependants  of  insured  persons.  While  provision  is  made  generally 
for  the  treatment  of  mental  defectives  amongst  the  population  at 
large,  separate  provision  is  made  through  separate  authorities  for 
mentally  defective  school-children  and  mentally  defective  paupers 
A  mother,  though  entitled  (if  insured)  to  medical  attendance  from 
the  insurance  doctor  under  the  insurance  committee  for  a  portion 
of  her  pregnancy  period  (but  not  at  confinement),  may  be  able  to 
obtain  advice  and  assistance  from  the  maternity  and  child  welfare 
scheme  of  another  authority  before  and  after  her  confinement 
obtam  maternity  benefit  from  her  approved  society  in  respect  oL 
her  confinement  (for  attendance  at  which  she  has  had  to  make 
private  arrangements),  and  later  resumes  her  right  to  attendance 

*  The  provisions  relative  to  voluntary  insurance,  except  as  to  those 
already  so  insured,  were  repealed  in  1918. 


32 


by  the  panel  doctor.  A  disabled  soldier,  if  Insured,  may  be  entitled 
to  medical  attendance  from  two  authorities  simultaneously  for  the 
disability  for  which  he  was  invalided.  Thus,  while  the  attendance 
will,  for  the  most  part,  be  provided  by  the  Insurance  authority,  It 
may  be  supplemented  by  the  pensions  authority,  but  the  extent  of 
his  disability  for  pensions  purposes  is  considered  by  medical  staff 
employed  either  by  the  pensions  authority  or  by  the  Ministry  of 
National  Service.  If  he  is  suffering  from  a  venereal  disease,  he 
would  be  handed  over  to  the  care  of  the  County  or  County  Borough 
Council  and  Insurance  Committee.  In  either  case  his  own  insur- 
ance doctor  would,  nevertheless,  be  supposed  to  retain  some  respon- 
sibility for  his  treatment.  Lastly,  in  the  event  of  his  contracting 
some  other  notifiable  infectious  disease,  he  may  be  taken  charge  of 
by  yet  another  body,  the  local  sanitary  authority.  The  ordinary 
insured  wage-earner  is  entitled  to  medical  attendance  in  his  home 
under  the  Insurance  Committee;  his  wife  and  infant  child  may  get 
medical  advice  at  the  Maternity  and  Child  Welfare  Clinic  of  the 
County  or  County  Borough  Council,  and  his  children  of  school  age 
are  medically  inspected  during  school  attendance  and  may  be 
treated  at  the  school  clinic  by  the  staff  of  the  local  education 
authority.  If,  however,  his  wife  or  children  need  medical  attend- 
ance so  provided,  he  must  arrange  privately  with  a  doctor  at  his 
own  expense,  or  send  them  to  the  out-patients'  department  of  a 
voluntary  hospital  at  the  expense  of  charitable  funds.  But  if  vac- 
cination is  necessary,  he  can  get  this  done  by  the  vaccination  officer 
of  the  guardians,  and  if  either  he  or  any  of  his  family  require 
residential  treatment,  admission  must  be  sought  to  the  in-patients* 
department  of  a  voluntary  hospital.  Should  destitution  occur  for 
any  reason,  a  different  set  of  medical  officers  and  of  residential  in- 
stitutions will  come  upon  the  scene  under  the  poor  law.  His  infant 
children  pass  in  due  course  from  the  purview  of  the  child  welfare 
clinic  to  that  of  the  school  clinic  and  later,  on  attaining  the  age 
of  16,  to  the  care  of  the  Insurance  practitioners.  Finally,  while 
different  practitioners  have  been  striving  In  separate  water-tight 
compartments,  under  arrangements  made  under  widely  different 
authorities  according  to  widely  different  (and  sometimes  conflict- 
ing) principles,  to  cope  with  the  many  forms  of  disease  or  subtly 
disabling  influences  to  which  health  may  be  subject,  yet  the  prime 
causes  of  their  sickness,  the  condition  of  the  man's  employment, 
and  of  the  factory  in  which  he  works,  the  sanitary  conditions  of 
the  tenement  and  slum  in  which  perforce  the  family  dwell,  the  food 
and  milk  which  are  their  sustenance,  are  the  care  of  other  separate 
authorities.  These  know  as  little  of  the  results  of  their  action  or 
Inaction  upon  the  human  object  of  their  responsibility  as  the  several 
doctors  who  are  struggling  with  the  consequences  know  of  one 
another's  labors." 

The  health  insurance  act  itself  is  responsible  for  con- 
tributing greatly  to  the  confusion  so  well  described  in 
the  foregoing  excerpt.  It  remains  to  be  seen  whether  it 
is  possible  to  co-ordinate  the  health  insurance  with  the 
other  health  agencies  of  the  state  or  whether  the  insur- 
ance organization  will  not  have  to  be  discarded  as  an  im- 
pediment. 

Proposed  Future  Legislation.  A  new  bill  has  been 
introduced  in  Parliament,  about  the  first  of  March  (19'20), 


^ 


33 

increasing  the  benefits  and  contributions;  but  our  labor 
informants  have  been  reticent  about  the  readjustment  of 
contributions  necessary  to  meet  the  increased  cost.  A 
proposed  readjustment  of  the  panel  doctors'  charges  has 
aroused  the  medical  profession  to  arms.  It  has  been  pub- 
licly proposed  to  discontinue  accumulating  reserves  for 
the  disablement  benefit  and  to  use  the  full  contributions 
immediately  to  pay  increased  benefits.  We  are  told  that 
this  proposal  has  received  less  consideration  than  would 
otherwise  have  been  given  it,  because  of  a  widespread 
belief  that  the  state  will  soon  have  to  take  over  the  in- 
surance and  administer  it  directly,  providing  funds  as 
expediency  may  determine. 

So  much  for  the  subject  from  the  viewpoint  of  British 
labor.  Turning  now  to  the  opinions  of  other  classes  in  the 
community. 

It  is  universally  admitted  that  the  representatives  of 
the  great  Frieiiiil^..Sacieties,  the  agencies  of  voluntary 
thrift  and  self -providence,  witL  a  wonderful  record  of 
achievement  behind  them,  uniformly  regard  the  National 
Health  Insurance  as  a  serious  menace  to  their  institu- 
tions and,  indirectly,  to  the  welfare  of  the  community. 

As  to  employers^ 

The  opinion  of  representative  employers  in  England  is  not  a 
matter  of  record  in  a  form  readily  available  for  the  present  purpose. 
Opinion  is  divided  largely  because  in  most  cases  the  subject  matter 
has  not  as  yet  become  one  of  serious  concern  to  the  employer.  The 
alleged  benefits  resulting  from  National  Health  Insurance  in  the 
direction  of  removing  ill-health  producing  conditions  in  particular 
trades  have  not  materialized.  One  large  representative  employer 
engaged  in  the  manufacture  of  war  materials  has  placed  on  record 
his  conviction  that  "The  British  Insurance  Act  is  the  most  colossal 
pious  fraud  ever  imposed  on  British  employers  and  employees  in 
the  history  of  England.  It  has  given  great  trouble  and  general  dis- 
satisfaction to  everyone,  except  perhaps  to  members  of  the  medical 
fraternity,  for  whose  benefit  the  act  appears  to  have  been  created." 
Another  large  manufacturer  writes  that  "We  frequently  hear  a 
good  deal  of  dissatisfaction  expressed  by  our  employees  with  their 
panel  doctors,  and  it  would  certainly  seem  to  us  that  the  complaints 
have  some  justification.  Many  of  the  industrious  and  better  class 
employees  prefer  to  attend  a  doctor  as  a  non-panel  patient,  but  it  is 
only  right  to  say  that  many  doctors  conscientiously  administer  the 
act  to  the  best  of  their  ability."  In  the  case  of  a  large  and  repre- 
sentative firm  of  pottery  manufacturers  in  the  Stoke-on-Trent  dis- 
trict similar  evidence  has  been  presented,  amplified  by  personal 
observations  of  members  of  the  firm,  that  to  their  knowledge  em- 
ployees prefer  to  make  use  of  non-panel  doctors  or  pay  panel  doctors 


I 


34 

privately  to  secure  adequate  and  proper  treatment.  A  firm  in  the 
north  of  Wales  points  out  that,  "While  the  administration  of  Na^ 
tional  Health  Insurance  may  not  be  more  burdensome  to  our  in- 
dustry than  to  any  others,  at  the  same  time  the  principle  of  bur- 
dening any  industry  with  the  collection  or  administration  of  State 
enactments  such  as  National  Health  Insurance  is,  in  our  opinion, 
entirely  wrong,  and  throws  upon  industry  work  which  it  should  not 
be  called  upon  to  do."  A  large  rubber  company  near  Birmingham 
writes:  "Our  experience  is  that  the  lowest  labor  class,  who  most 
require  the  benefits,  do  not  get  it."  "The  intermittent  worker  drops 
out  of  benefit  rather  quickly.  Most  of  them  do  not  belong  to  an. 
Approved  Society  but  insure  through  the  Post  Office.  There  are 
many  complaints  that  Post  Office  cards  are  lost,"  etc.  A  representa- 
tive firm  of  linoleum  manufacturers  in  Scotland  points  out  that: 
"We  do  not  know  that  the  introduction  of  National  Health  Insur- 
ance has  led  to  any  material  improvement  in  the  health  of  the 
wage-earning  population,"  a  statement  fully  confirmed  by  the  vital 
statistics  of  Scotland.  To  the  foregoing  may  be  added,  in  conclu- 
sion, a  statement  by  a  firm  of  paper  manufacturers  near  Birming- 
ham that:  "It  seems  to  us  that  it  is  the  duty  of  the  state  to  see 
that  all  employees  are  cared  for  in  case  of  sickness  and  breakdown; 
but  the  present  system  is  cumbersome,  wasteful  and  extravagant 
and  does  not  achieve  the  object  of  bringing  to  the  lower  classes  the 
proper  medical  service  needed.  In  the  upper  classes  of  the  poorer 
people  we  find  that  in  many  instances  they  will  not  avail  them- 
selves of  the  panel  doctor,  preferring  to  pay  themselves  and  go  to  a 
doctor  of  their  own  choice." 

The  opinion  of  the  na^^dical  profession,  as  expressed  by- 
its  organized  bodies,  seems  to  be  generally  favorable  to 
the  act,  except  for  dissatisfaction  with  the  fees  allowed 
the  panel  doctors.  But  a  large  proportion  of  the  pro- 
fession dissent  strongly  from  that  view.  Thus  Sir  Arthur 
Newsholme,  formerly  Chief  Medical  Officer  of  the  Local 
Government  Board  for  England,  speaking  recently  in 
New  York,  said  in  reference  to  this  subject : 

"The  act  in  its  present  form  is  now  generally  condemned;  and 
it  is  significant  that  the  need  for  its  radical  reorganization  appears 
to  be  universally  accepted.  Two  medical  benefits  (medical  and 
sanatorium)  and  a  maternity  benefit  were  conferred  under  the  act; 
but,  as  they  have  been  administered,  it  cannot  be  affirmed  that  any 
marked  public  benefit  has  accrued;  and  it  is  certain  that  if  the 
same  amount  of  money  had  been  placed  in  the  hands  of  the  public 
health  authorities  to  provide  adequate  medical  aid  to  those  needing 
it,  of  the  kind  most  lacking  and  which  they  could  least  afford  to 
obtain,  great  benefit  to  the  public  health  would  have  been  secured." 

And  William  A.  Brend,  M.  D.,  a  writer  of  authority, 
in  *' Health  and  the  State,''  had  this  to  say: 

"In  taking  a  broad  view,  the  advantages  of  the  act  must  not  be 
minimized.  .  .  .  But  these  benefits  are  all  in  the  nature  of  poor 
relief  under  another  name,  and  they  do  little  to  alter  the  conditions 
which  bring  about  sickness.  As  far  as  improvement  of  the  public 
health  is  concerned,  the  influence  of  the  act  has  probably  been 


35 

almost  nil.  The  medical  service  is  no  better  than  that  which  pre- 
ceded it,  the  main  change  being  that  a  certain  number  of  persons 
who  formerly  went  to  infirmaries  and  hospital  out-patient  depart- 
ments now  go  to  panel  doctors;  sanatorium  treatment  has  proven 
of  little  value  among  the  working  classes;  the  provisions  intended 
to  deal  with  the  evils  of  bad  housing  and  insanitary  conditions  are 
unworkable;  and  the  schemes  for  collecting  public  health  informa- 
tion are  futile.  Nearly  all  classes  grumble  at  the  act;  and  though 
the  panel  practitioners  have  benefited  financially  the  medical  pro- 
fession has  been  split  into  two  camps,  between  which  much  bitter- 
ness exists." 

We  may  conclude  this  review  with  the  following  ex- 
pression of  opinion  of  the  radical  reformers  of  Great 
Britain,  taken  from  **The  New  Statesman,''  of  Decem- 
ber 1, 1917 : 

"Practically  none  of  the  fundamental  drawbacks  and  none  of  the 
serious  injustices  of  the  scheme  have  been  remedied."  The  amended 
act  "leaves  untouched  both  the  grievances  of  the  doctors  and  the 
still  more  serious  failure  of  the  commission  to  supply,  as  the  act 
promised,  'adequate  medical  treatment;'  .  .  .  the  provision  of 
appliances  and  medicines  is  still  unfairly  restricted;  .  .  .  the 
practical  breakdown  of  the  campaign  against  tuberculosis  remains 
unremedied;  ...  at  least  half  a  million  women  of  the  same 
class  as  the  rest  are  still  excluded  from  the  maternity  benefit; 
...  the  'deposit  contributors'  are  still  unprovided  with  anything 
that  can  be  called  insurance;  ...  the  economic  absurdity  of 
abstracting  a  loaf  of  bread  a  week  from  hundreds  of  thousands 
who  have  demonstrably  not  enough  to  live  on  continues  unchanged ; 
.  .  .  and  the  commission  has  failed  to  solve  the  problem  of  the 
casual  laborer.  .  .  .  Above  all  stands  the  failure  of  the 
scheme  as  a  measure  of  public  health.  The  act  has  not  had  any 
appreciable  effect  in  preventing  disease,  diminishing  infant  mortal- 
ity or  in  encouraging  hygienic  ways  of  living." 

Taking  everything  together,  the  following  conclusions 
as  to  the  British  health  insurance  system  seem  to  be  jus- 
tified :  Since  our  investigation  in  1914  some  features  of 
the  administration  of  the  health  insurance  have  been  im- 
proved, but  its  methods  of  adminJ^terinj:_^^  have 
been  found  essentially  defective  and  unsatisfactory, 
so  that  it  is  necessary,  in  some  way  not  yet  deter- 
mined, entirely  to  reorganize  and  in  effect  to  start  all 
over  again,  experimenting  as  at  the  beginning.     The 

r  original  income  provided  has  been  shown  to  have  been  in- 
sufficient to  obtain  the  medical  and  sanatorium  benefits 
promised,  and  the  recent  abnormal  rise  in  prices  has 
thrown  the  cash  benefits  out  of  scale,  so  that  an  entire 
reorganization  of  the  financial  pktfirts  necessary;  and  in 


36 


proposals  for  such  reorganization  there  are  indications 
of  a  disposition  to  abandon  any  settled  plan  of  finance 
and  to  muddle  along  experimentally,  incidentally  calling 
upon  the  taxpayers  for  more  and  more  aid,  thereby  more 
and  more  confounding  the  insurance  with  poor  relief.  As 
to  many  details,  such  as  malingering,  the  problem  of  the 
casual  laborer,  expulsions,  etc.,  the  abnormal  conditions 
during  the  war  have  prevented  the  accumulation  of  any 
conclusive  normal  experience.  As  to  the  methods  and  re- 
quirements governing  the  wage-workers  who  fall  under 
the  compulsory  system,  our  American  citizens  are  invited 
to  read  the  description  of  them  given  on  pages  104-6, 
post,  and  take  account  of  the  response  of  their  own  senti- 
ments in  consequence.  Under  the  circumstances  it  seems 
to  this  Committee  that  the  test  in  Great  Britain  of  the 
expediency  of  compulsory  health  insurance  is  just  about 
where  it  was  six  years  ago,  and  that  the  most  favorable 
conclusion  possible  is  a  further  suspense  of  judgment.* 

J.  W.  SuLUrVTAN, 

Arthur  Williams, 

P.  Tecumseh  Sherman, 

Frederick  L.  Hoffman. 


*  For  a  summary  of  the  provisions  and  effect  of  the  British  National 
Health  Insurance  Act  of  May  20,  1920,  which  was  enacted  subsequent  to 
the  preparation  of  this  report,  see  "First  Annual  Report  of  the  Ministry 
of  Health,  1919-1920— Part  IV— Administration  of  National  Health 
Insurance— 1920— [Cmd.  913]";  also  "Monthly  Labor  Review",  Sep- 
tember, 1920  (pp.  1-11).  For  the  British  Unemployment  Insurance  Act 
of  August  9,  1920,  see  "Monthly  Labor  Review",  September,  1920,  pp. 
165-169. 

It  should  be  noted  that  the  Health  Insurance  Act  of  1920  does  not 
reframe  the  whole  insurance  system  with  a  view  to  remedying  its 
many  faults  and  imperfections  above  disclosed  or  indicated,  but  is 
merely  a  piece  of  temporary  tinkering  on  a  few  points  only. 


* 


BRIEF  REVIEW  OF  EUROPEAN   SOCIAL 
INSURANCE  EXPERIENCE. 

For  analyses  of  the  various  European  social  insurance 
laws  and  for  the  official  statistics  relative  thereto,  so  far 
as  published  in  this  country,  the  reader  is  referred  to  the 
24th  Report  of  the  Commissioner  of  Labor,  1909,  and  to 
the  Bulletins  of  the  U.  S.  Bureau  of  Labor  Statistics. 
The  following  tables  are  intended  merely  to  give  a  rough 
outline  of  the  whole,  as  a  guide  to  what  follows.  The 
figures  given  in  these  tables  and  in  the  matter  following 
are  not  authoritative.  But  they  have  been  carefully  col- 
lated by  several  of  our  members,  principally  from  official 
publications,  and  are  about  as  close  an  approximation  to 
the  truth  as  available  sources  of  information  enable  us 
to  present. 


, 

TABLE  I. 

Sickness 

Insurance. 

Country 

Form 

No.  Insured 

Population 

Great  Britain 

Compulsory 

15,000,000 

(1919) 

45,000,000 

Germany* 

« 

14,500,000 

(1913) 

65,000,000 

Austria 

M 

3,340,000 

(1913) 

27,800,000 

Hungary 

M 

900,000 

(1909) 

21,000,000 

Luxemburg 

« 

37,500 

(1910) 

260,000 

Russia* 

M 

1,394,000 

(1914) 

145,000,000 

Netherlands* 

«« 

9 

• 

6,500,000 

Norway* 

«< 

7 

2,400,000 

Roumania* 

M 

140,000 

(1911) 

7,070,000 

Servia* 

M 

0 

4,500,000 

Portugal* 

(« 

• 

6,000,000 

Denmark* 

Voluntary — 

Subsidized 

990,690 

(1917) 

2,775,000 

France* 

« 

3,747,176 

(1912) 

39,700.000 

Sweden 

«< 

637,049 

(1912) 

5,700,000 

Finland 

M 

43,265 

(1909) 

3,000,000 

Belgium* 

** 

500,000 

(1912) 

7,400,000 

Switzerland* 

Mixed 

531,803 

(1917) 

3,700,000 

*Notes  to  Tame  I. 

The  German  insurance,  until  then  limited  in  application  to  what 
may  roughly  be  termed  the  organized  industries,  was  being  ex- 
tended at  the  outbreak  of  the  war  to  apply  also  to  domestic  servants 
and  agricultural  and  itinerant  labor;  but  no  data  relative  to  such 
extended  coverage  is  yet  available.  It  is  not  even  known  that  such 
extension  is  yet  really  effective.    In  July,  1914,  it  was  not. 

The  Russian  compulsory  law  covers  only  European  Russia — Fin- 
land excluded — and  the  Caucasus.  It  was  just  being  put  into 
effect  at  the  outbreak  of  the  war. 

37 


38 


The  Dutch  law  was  to  have  taken  effect  in  1914.  Data  showing 
how  far  it  has  actually  been  put  into  effect  is  not  yet  obtainable. 
By  its  terms  it  applies  only  to  low  paid  labor,  and  excludes  casual 
labor  and  domestic  servants.    See  post,  p.  45. 

The  Norwegian  law  took  effect  in  1911,  and,  according  to  its 
terms,  is  quite  wide  in  application;  but  no  data  as  to  its  actual 
coverage  have  yet  been  obtained.    See,  post,  p.  44. 

The  Roumanian  law  was  enacted  in  1910  and  took  effect  on  paper 
in  1911 ;  but  in  early  1914  it  was  still  generally  ineffective,  and  has 
since  been  practically  suspended  by  war. 

The  Servian  law  was  enacted  in  1911 ;  but,  owing  to  wars,  it  has 
never  yet  been  put  into  practical  effect. 

The  Portuguese  law  has  just  been  enacted.  With  the  pending 
revolutions  and  political  executions,  what  is  needed  in  Portugal  is 
life,  rather  than  sickness,  insurance. 

The  insured  under  the  Danish  law  include  many  unemployed 
women,  and  not  inclusively  wage-workers.    See,  post,  p.  46. 

The  number  insured  given  in  the  table  under  the  French  law 
covers  only  those  insured  in  officially  recognized  societies,  exclusive 
of  school  children  (many  of  whom  are  insured  in  special  recognized 
societies),  and  of  persons  insured  in  officially  unrecognized  asso- 
ciations; but  it  includes  some  who  are  insured  against  death  or  in- 
validity but  not  against  sickness.    See,  post,  p.  49. 

The  number  insured  in  Belgium  is  approximate  for  the  mutual 
aid  societies  alone.  Various  establishment  funds  exist  with  many 
thousands  of  insured  members  in  addition.    See,  post,  p.  47. 

Under  the  new  Swiss  law  insurance  is  voluntary,  but  any  Canton 
can  make  it  compulsory,  and  some  have  done  so.    See,  post,  p.  52. 

Not  mentioned  in  the  table,  in  Italy  sickness  insurance  is  com- 
pulsory for  railway  employees,  and  maternity  insurance  is  compul- 
sory for  women  employed  in  some  industries. 

Since  this  table  was  compiled  it  has  been  reported  that  health 
insurance  laws  have  been  enacted  in  Poland  and  Czecko-Slovakia. 

It  is  also  reported  that  the  income  limitations  under  the  British 
and  German  laws  have  been  increased,  but  such  increases  hardly 
cover  the  recent  rise  in  wage  rates  and  consequently  do  not  extend 
the  scope  of  those  laws. 


TABLE  II. 

- 

Invalidity 

Insurance. 

Year 

Country 

Form 

No.  Insured 

Effective 

Germany 

Compulsory 

16,300,000 

1890 

Luxemburg 

<< 

9 

• 

• 

France* 

m 

7,000,000 

1911 

Great  Britain 

M 

15,000,000 

1914 

Netherlands 

M 

9 

• 

1914 

Sweden 

M 

3,240,000 

1914 

Italy 

M 

? 

• 

1919 

Portugal 

M 

? 

• 

1919 

Roumania 

M 

? 

1911* 

Servia 

U 

• 

1911* 

Belgium* 

Voluntary — { 

Subsidized 

1,130,000 

France* 

« 

M 

2,000,000  ( 

?) 

*Notes  to  Table  II. 

The  compulsory  insurance  listed  in  this  table  is  all  invalidity  and 
old  age  insurance,  except  the  British  system,  which  is  sickness  and 
invalidity  insurance,  covering  invalidity  up  to  the  age  of  70  only 
(when  it  is  replaced,  in  case  of  indigency,  by  old  age  pensions), 
and  the  German  and  French  systems,  which,  besides  covering  in- 


39 

validity  and  old  age,  provide  some  insurance  for  surviving  depen- 
dents in  case  of  death.  France  is  listed  twice  to  indicate  that  the 
old,  voluntary  insurance  is  the  Caisse  Nationale  des  Retraites  and 
the  mutual  benefit  societies  still  continues  along  with  the  new  com- 
pulsory insurance;  but  the  aggregate  of  the  figures  given  for  the 
voluntary  and  the  compulsory  insurance,  of  course,  contains  many 
duplicates.  Special  compulsory  laws  for  miners,  seamen,  railroad 
employees  and  public  servants  are  not  listed  in  this  table.  Also 
omitted  are  Austrian  laws  applying  only  to  miners  and  office  em- 
ployees, respectively,  and  a  Hungarian  law  (1909)  applying  only 
to  miners,  domestic  servants,  agricultural  laborers  and  peasant 
proprietors.  On  the  other  hand,  the  Roumanian  and  Servian  laws, 
intended  to  take  effect  in  1911,  are  listed  pro  forma;  but  they  are 
as  yet  merely  projects,  of  little  or  no  practical  effect.  The  number 
of  insured  given  for  Belgium  is  the  total  membership  of  the  ''Caisse 
Oenerdle  de  Retraite''  in  1908,  and  of  the  "Miners'  Provident  Funds" 
in  1905. 

TABLE  III. 
Unemployment  Insurance. 


Country. 

Great  Britain* 

Belgium* 

France* 

Denmark* 

Norway* 

Netherlands 

Germany 

Switzerland 


Form. 
Compulsory. 
Voluntary— Subsidies  to  trade  union  funds. 


4* 


«< 


M 
«« 


M 


(( 
M 


M 

« 
tt 


Voluntary — Some  local  subsidized  funds. 


*Notes  to  Tamo  III. 


This  table  excludes  the  special  measures  taken  by  European  gov- 
ernments to  relieve  unemployment  during  the  war  or  the  period  of 
demobilization. 

A  study  of  the  British  unemployment  insurance,  by  one  of  our 
members,  is  presented  in  a  later  chapter.  With  that  exception,  our 
Committee  has  not  investigated  unemployment  insurance  abroad. 

For  early  data  relative  to  unemployment  insurance  in  Belgium, 
see  24th  Annual  Report  of  the  Commissioner  of  Labor,  p.  548.  In 
1912  there  were  432  trade  union  funds,  with  about  28,000  members, 
receiving  municipal  subsidies.  The  subsidies  averaged  about  45% 
of  the  full  benefits. 

For  France,  see  24th  Annual  Report  of  the  Commissioner  of 
Labor,  p.  959.  In  1913  there  were  117  funds,  with  about  50,000 
members,  receiving  public  subsidies.  The  benefits  paid  amounted 
to  about  $45,000,  of  which  $10,901  was  reimbursed  to  the  unions  by 
subsidies. 

For  Denmark,  see  Monthly  Review  of  the  Bureau  of  Labor  Statis- 
tics, February,  1916,  p.  107.  It  is  there  stated  that  during  the  year 
ending  March  31,  1915,  there  were  57  funds,  with  about  130,000 
members,  supported  by  contributions — 51%  from  members,  30% 
from  the  state,  14%  from  municipalities,  and  5%  from  interest, 
donations,  etc. 

In  Norway,  in  1913,  there  were  18  funds,  more  or  less,  with  about 
30,000  members,  and  about  $68,000  annual  income,  of  which  income 
|9,522  came  from  state  subsidies. 

Since  this  table  was  prepared,  and  while  this  report  has  been  in 
the  hands  of  the  printer,  it  has  been  announced  that  a  system  of 
unemployment  insurance  has  been  adopted  in  Italy;  see  Monthly 
Labor  Review,  April,  1920,  pp.  191-8. 


> 


40 

Passing  Table  III,  as  relating  to  a  subject  we  have 
not  investigated,  we  take  up  first  Table  II — **  Invalidity 
Insurance'' — in  order  to  dispose  of  that  subject  briefly 
and  to  get  to  the  subject  of  sickness  insurance,  with  which, 
although  of  far  less  social  importance,  we  in  America  are 
more  immediately  concerned : — 

This  table  indicates  a  rush  by  European  governments 
during  recent  years  to  experiment  with  compulsory  in- 
validity insurance.  We  should  not  be  misled  by  that  move- 
ment, for  the  reason  that  it  has  been  actuated  more  by 
popular  impatience  with  intolerable  economic  conditions 
and  by  the  spread  of  socialism,  than  by  any  strong  belief 
among  the  well  informed  in  the  efficacy  of  this  type  of 
social  insurance.  It  is  by  results  that  we  should  appraise 
the  value  of  these  experiments.  And  only  one  of  them — 
the  German — has  been  in  operation  long  jenough  to  pro- 
duce results  sufficient  for  appraisal.  All  the  others  are 
either  just  starting  or  are  only  about  to  start.  And  the 
serious  troubles  some  of  them  are  having  at  the  very 
start  (e.  g.y  the  British  and  Ftench  systems)  are  warn- 
ings against  imitation. 

The  sole  tested  precedent  for  compulsory  invalidity 
insurance,  as  above  explained,  the  German  system — 
which  may  be  said  to  cover  Luxemburg — calls  for  no 
further  consideration.  Its  daring  plan  of  finance  is  uni- 
versally condemned.  The  abuses  to  which  it  has  given 
rise  are  notorious.  Its  administrative  methods  are  the 
quintessence  of  autocracy  and  absolutism.  As  to  whether 
or  not  those  methods  are  socially  advantageous  even  un- 
der conditions  in  Germany,  minds  may  reasonably  differ ; 
but  there  would  be  no  sense  in  adopting  such  methods 
solely  for  social  insurance  in  America,  and  leaving  the 
remainder  of  our  present  political  and  social  organiza- 
tion entirely  out  of  harmony  and  inconsistent.  And  es- 
sentially this  German  insurance  is  poor  relief,  fitted  only 
for  application  to  a  proletariat  submerged  to  a  low  level. 
If  there  be  anything  in  state-provided  invalidity  insur- 
ance to  be  found  in  Europe  fit  for  a  free  people,  it  must 


\ 


\ 


I 


41 

be  looked  for  in  future  developments  from  some  one  of 
the  more  recent  and  as  yet  untested  of  these  experiments. 

It  may  be  noted  in  conclusion  that  the  opinion  seems 
to  be  growing  in  Europe,  even  among  the  partisans  of 
state  paternalism,  that  state  provided  invalidity  and  old 
age  insurance  entails  too  much  bureaucracy,  too  much  ad- 
ministrative expense  and  too  many  financial  complica- 
tions, to  be  advisable.  The  alternative  proposed  by  the 
patemalists  is  **  non-contributory "  insurance — i.  e.,  in- 
validity and  old  age  pensions  entirely  at  the  expense  of 
the  state.  Thus  the  drift  seems  to  be  through  compulsory- 
state  insurance  to  no  popular  insurance  at  all.  In  our 
opinion,  that  is  not  the  road  of  true  progress. 
i^^  Coming  now, t a. sickness  insurance^which  will  be  con- 
sidefed^in  more  detail  because  of  the  movement  now 
pending  in  America  for  the  adoption  of  compulsory  sick- 
ness insurance,  under  the  name  of  *^ health  insurance'' : — 

In  a  ^' Brief  for  Health  Insurance,"  published  by  the 
American  Association  for  Labor  Legislation,  June,  1916, 
therq  is  a  map  of  Europe  with  all  Russia,  Norway,  Ger- 
many, Austria,  Roumania,  Servia,  Luxemburg,  Holland 
and  Great  Britain  marked  in  red,  to  indicate  that  those 
countries  have  compulsory  health  insurance  laws;  and 
then  it  is  stated  in  the  text  that :  ^^All  the  laws  cover  prac- 
tically all  low  paid  wage-workers."  In  an  address  de- 
livered by  Dr.  John  B.  Andrews,  Washington,  D.  C,  De- 
cember, 1916,  it  was  declared  that:  ** Today  universal 
health  insurance  is  established  in  not  fewer  than  ten  of 
the  leading  continental  countries."  And  in  an  argument 
before  a  committee  of  the  New  York  Legislature,  March, 
1918,  Miles  M.  Dawson,  Esq.,  is  reported  to  have  said: 
** Health  insurance  on  a  compulsory  basis  is  in  force  in 
Great  Britain,  Norway  and  Switzerland,  and  is  equally 
successful  in  all  those  countries."   (All  italics  are  ours.) 

But  a  comparison  of  the  number  insured  with  the  pop- 
ulation of  each  of  the  countries  mentioned,  for  which  par- 
ticulars see  Table  I,  will  show  that  when  those  statements 
were  made  there  were  just  two  countries  in  Europe  in 


p 


42 

which  compulsory  health  insurance,  applying  to  approxi- 
mately all  low  paid  wage-workers,  was  known  to  have 
been  established — ^namely,  Great  Britain  and  Norway. 
The  German  law  was,  at  the  outbreak  of  the  war,  about 
to  be  extended  to  a  similarly  wide  application;  but  it  is 
not  even  yet  known  whether  it  has  ever  been  truly  estab- 
lished in  such  wider  application.  The  Dutch  law,  which 
excludes  some  classes  of  low  paid  wage-workers,  was  to 
have  taken  effect  in  1914,  but  it  is  not  known  yet  that  it 
has  been  established  in  normal  operation.  And  the  laws 
of  all  the  other  countries  mentioned  are  either  quite  in- 
effective or  expressly  restricted  in  application  to 
small  percentages  of  the  ** wage-workers'' — such  small 
percentages  in  fact  as  to  compare  unfavorably  even  in 
extension  with  some  of  the  voluntary  systems.  As  to  the 
statement  that  the  British,  Norwegian  and  Swiss  **  com- 
pulsory*' systems  are  ** successful":  The  Swiss  law  is 
voluntary,  except  in  some  Cantons  and  Communes  (see 
post,  pp.  52-55) ;  there  is  no  material  evidence  available 
to  indicate  whether  the  Norwegian  law  is  truly  **suc- 
cessfur*  or  not;  and  the  evidence  is  overwhelming  that 
the  British  law  is  pre-eminently  unsuccessful. 

The  statements  just  criticised  are  cited,  incidentally 
to  illustrate  the  spirit  of  exaggeration  that  characterizes 
the  propaganda  for  compulsory  sickness  insurance  in  this 
country,  but  more  particularly  to  emphasize  the  basic 
assumption  that  underlies  that  propaganda — i.  e.,  that  as 
soon  as  a  compulsory  insurance  law  is  adopted  on  paper, 
immediately,  by  mere  legislative  fiat,  the  insurance  be- 
comes ** established,''  universally  effective  and  generally 
successful.  That  assumption  simply  begs  the  question  at 
issue,  namely — the  relative  social  value  of  compulsory 
and  voluntary  insurance — and  is,  of  course,  absurd.  Be- 
fore giving  weight  to  the  mere  adoption  of  compulsory 
sickness  insurance  by  a  European  country  we  should 
learn  how  that  insurance  really  works;  the  classes  and 
proportion  of  the  people  or  of  the  work-people  actually 
covered;  the  fitness  of  the  insurance  for  the  varying 


i 


43 

'  needs  of  all  those  covered ;  the  proportion  of  the  insured 
**out  of  benefit";  the  nature  and  quality  of  the  medical 
benefits,  if  any,  actually  provided ;  the  relation  between 
the  insurance  and  the  medical  profession  and  the  effect 
of  the  insurance  upon  the  practice  of  medicine ;  the  certi- 
tude and  promptness  with  which  the  insured  obtain  the 
benefits ;  the  distribution  of  the  cost ;  the  extent  to  which 
the  insurance  partakes  of  the  character  of  poor  relief 
and  its  relations  with  the  *'poor  laws";  the  character, 
efficiency  and  cost  of  the  administrative  machinery,  in- 
cluding particularly  the  ** concealed  cost";  the  extent  of 
malingering  and  kindred  abuses ;  the  relations  of  the  in- 
surance with  and  its  influence  upon  supplementary  forms 
of  voluntary  thrift  and  self -providence,  etc.  These  are  all 
** facts/'  not  to  be  assumed  nor  accepted  unquestioningly 
from  official  reports,  but  to  be  learned  by  investigation 
or  adequate  inquiry.  The  German  and  Austrian  experi- 
ence up  to  1914  has  been  more  or  less  thoroughly  studied 
and  the  facts  thereby  revealed  are  slowly  becoming 
known  and  appreciated  in  America.  We  have  succeeded 
in  learning  the  British  experience  to  date  quite  thor- 
oughly, as  reported  in  a  preceding  chapter.  It  is  upon 
the  experience  of  these  three  countries  that  we  base  the 
tentative  conclusions  presented  in  the  first  chapter  of  this 
report. 

As  to  the  other  systems  listed  in  Table  I,  and  as  to 
the  German  amendmonts  intended  to  become  effective  in 
1914,  the  outbreak  of  the  war  not  only  shut  off  all  possi- 
bilities of  thereafter  investigating  earlier  experience,  but 
also  practically  terminated  all  normal  experience.  And 
since  the  war  conditions  have  continued  nearly  as  un- 
favorable for  investigation.  Even  in  the  neutral  coun- 
tries, we  are  advised,  everything  relative  to  social  in- 
surance is  still  disturbed  and  abnormal.  A  good  deal  of 
information  has  been  obtained;  but  it  is  generally  frag- 
mentary and  superficial,  relating  more  to  changes  in  laws, 
administrative  machinery,  projects  for  the  future,  hopes, 
contentions,  etc.,  than  to  actual  results  accomplished  by 


44 


insurance — in  other  words,  it  relates  to  matters  for 
future  observation  rather  than  to  completed  experience 
fit  to  be  relied  upon  as  a  guide  to  conduct. 

This  late  information,  such  as  it  is,  will  now  be  re- 
viewed, noting  to  start  with  that  there  is  nothing  rela- 
tive to  social  insurance  since  July,  1914,  to  record  about 
Austria,  Hungary,  Kussia,  Roumania,  Servia  or  Finland, 
except  wreck  and  ruin. 

Germany.  In  a  purely  mechanical  sense,  the  German 
sickness  insurance,  with  the  help  of  a  huge  government 
bureaucracy,  has  been  widely  effective.  But  up  to  1914 
agricultural  labor,  domestic  service  and  the  itinerant 
trades  were  excluded.  We  have  not  been  able  to  learn 
whether  the  sickness  insurance  has  yet  been  actually  ex- 
tended to  cover  and  provide  the  benefits  for  those  hither- 
to excluded  occupations.  It  remains  a  subject  for  future 
investigation  to  learn  how  efficiently  it  may  operate  in 
application  to  them.  At  present  there  is  no  information 
of  any  compulsory  sickness  insurance  law  applying  effi- 
ciently and  satisfactorily  to  agricultural  labor,  domestic 
servants,  casual  labor,  or  the  itinerant  trades.  The 
merits  of  state  compulsion  as  a  means  for  making  sick- 
ness insurance  **universar*  are  still  entirely  undemon- 
strated. 

Norway.  Sickness  insurance  was  made  compulsory 
in  Norway  by  a  law  enacted  in  1909,  to  take  effect  in 
1911,  amended  in  1911,  and  codified  with  amendments  to 
take  effect  in  1916.  (For  an  abstract  of  the  provisions 
of  this  law,  see  Monthly  Review  of  the  U.  S.  Bureau  of 
Labor  Statistics,  December,  1916).  The  outstanding 
features  of  this  system  are :  Insurance  is  compulsory  for 
practically  all  wage-workers  (including  domestic  servants 
and  peasant  farmers)  whose  annual  earnings  do  not  ex- 
ceed 1600  crowns  ($428.80)  in  rural  districts  or  1800 
crowns  ($482.40)  in  urban  districts.  Public  sick  funds 
are  instituted,  but  the  insurance  may  be  carried  in  trade 
or  private  funds.     Premiums  are  payable  for  a  com- 


' 


45 

pulsorily  insured  member,  six-tenths  by  the  member, 
one-tenth  by  his  employer,  one-tenth  by  the  municipality 
and  two-tenths  by  the  state.  Voluntarily  insured  mem- 
bers pay  seven-tenths  of  the  premium,  the  subsidies  being 
the  same  as  for  a  compulsorily  insured  member.  In 
order  to  avoid  abuses  in  medical  service,  provision  is 
made  for  the  substitution  of  extra  cash  benefits  in  place 
of  the  insured  medical  benefits,  physicians  are  compelled 
to  furnish  their  services  at  ordinary  rates,  and  the  sick 
funds  are  authorized  to  exclude  persons  suffering  from 
chronic  diseases.  Little  data  relative  to  this  Norwegian 
insurance  is  yet  obtainable;  and,  so  far  as  we  are  able 
to  learn,  its  operations  have  never  yet  been  critically 
studied  and  reported. 

The  Netherlands.  Under  a  law  or  laws  adopted  June 
5,  1913,  sickness  insurance  was  to  become  compulsory  in 
Holland,  beginning  in  1914,  for  all  wage-workers,  except 
casual  or  day  laborers,  domestic  servants,  apprentices, 
taxpayers,  persons  whose  daily  wages  exceed  $1.01  or 
$2.02  (according  to  locality),  etc.  The  special  features 
of  this  law  are :  The  premiums  are  payable  one-half  by 
the  insured  and  one-half  by  the  employer,  the  employer 
collecting  the  insured's  contribution  and  remitting  it, 
along  with  his  o^vn  contribution,  to  the  state.  The  cash 
benefit  insured  is  high,  averaging  about  70%  of  wages. 
There  is  no  medical  benefit,  but  the  payment  of  the  cash 
benefit  is  conditioned  upon  the  insured's  providing  him- 
self with  due  medical  care.  The  insured  may  choose  his 
own  insurance  carrier.  The  state 's  functions  are  limited 
to  collecting  the  premiums  and  transmitting  them,  less 
deductions  for  expenses,  to  the  proper  insurance  car- 
riers, and  to  determining  the  right  to  benefits  where  the 
insurance  is  not  placed  in  a  specially  approved  insurance 
carrier.  We  have  not  been  able  to  ascertain  how  far  this 
law  has  yet  been  put  into  actual  and  normal  operation. 

Sweden.  In  Sweden,  through  co-operation  between 
the  state  and  communities,  medical  care  and  attendance 


\ 


II 


46 


is  organized  by  a  system  of  public  and  special  institu- 
tions, with  doctors,  nurses  and  midwives,  in  all  parts  of 
the  country.  As  a  result  of  this,  and  of  public  supervi- 
sion of  hygienic  conditions  generally,  the  mortality  in 
Sweden  is  exceptionally  low.  Supplementing  the  publicly 
provided  medical  care,  pecuniary  relief  in  sickness  is  in- 
sured by  voluntary  membership  in  various  mutual  bene- 
fit, guild,  trade  and  establishment  funds.  Such  insurance 
has  been  promoted  since  1891  by  a  small  per  capita  sub- 
sidy (generally  about  twenty  or  thirty  cents  per  annum) 
from  the  state.  Under  this  influence  the  number  of  the 
insured  has  increased  rapidly  and  steadily,  from  24,735, 
in  1892,  to  637,049,  in  1912.  Notwithstanding  such  en- 
couraging progress,  there  is  now  pending  a  proposal  to 
make  sickness  insurance  compulsory,  based  upon  the 
report  of  a  committee,  of  which  Mr.  Branting,  the  present 
Premier,  was  at  one  time  a  member.  This  proposal  is 
simply  one  item  in  the  program  of  the  Socialist  party. 
A  critical  analysis  of  the  report  of  the  committee,  just 
referred  to,  by  one  of  our  members,  follows  in  a  later 
chapter. 

Denmark.  The  early  operations  of  the  voluntary, 
state  subsidized  sickness  insurance  system  of  Denmark 
are  well  presented  in  the  *  ^  Twenty-Fourth  Report  of  the 
Commissioner  of  Labor,  1909' ';  and  some  phases  of  the 
medical  experience  are  analyzed  in  **  Medical  Benefit  in 
Germany  and  Denmark,'*  by  I.  G,  Gibbon  (P.  S.  King  & 
Son,  London,  1912).  The  latest  figures  available  show 
that  this  insurance  has  been  spreading  fast  and  steadily, 
the  number  of  the  insured  having  increased  from  117,000 
in  1893  to  990,690  (49.80%  of  the  population  over  15)  in 
1917.  Because  this  number  of  insured  includes  a  large 
proportion  of  married  women,  it  does  not  indicate  that 
the  insurance  yet  covers  quite  as  high  a  proportion  of  the 
wage-workers  as  is  desirable.  But  it  proves  that  volun- 
tary insurance  can  be  made  to  penetrate  to  the  more  in- 
digent classes  of  the  population.    And  it  remains  to  be 


I 


47 

demonstrated  that  this  kind  of  insurance  cannot  event- 
ually reach  practically  as  wide  an  extension  as  the  most 
autocratic  compulsory  insurance,  or  at  least  as  wide  an 
extension  as  is  desirable — i.  e.  with  the  really  **bad 
risks,"  on  the  one  hand,  and  the  self-sufficient,  on  the 
other  hand,  left  out. 

For  some  late  statistics  of  Danish  sickness  insurance 
see  *' Monthly  Review,''  Bureau  of  Labor  Statistics,  De- 
cember, 1915,  pp.  84-5,  and  March,  1919,  pp.  306-7. 

Belgium.  In  Belgium  a  large  amount  of  old-age  in- 
surance in  state  institutions  had  been  built  up  before  the 
war.  But  sickness  insurance  had  been  comparatively 
neglected.  Many  public  sickness  insurance  measures  had 
been  proposed  and  debated  for  years.  Finally,  in  May, 
1914,  the  government  put  through  the  Chamber  of  Rep- 
resentatives a  bill  for  compulsory  sickness,  premature  in- 
validity and  old  age  insurance.  The  real  fight  over  this 
bill  was  expected  in  the  Senate.  But  before  it  reached 
the  Senate,  the  war  intervened.  Since  the  treaty  of 
peace  this  bill  has  been  revived,  and  we  are  informed 
that,  under  strong  pressure  by  the  Socialists,  it  is  likely 
to  pass. 

Under  this  measure,  sickness,  invalidity  and  old  age 
insurance  is  to  be  obligatory  for  all  persons  employed, 
at  wages  or  salaries  not  exceeding  2400  francs  ($480)  a 
year,  in  agriculture,  commerce  or  industry — with  some 
few  exceptions.  The  old  age  insurance  is  to  be  carried 
in  the  Caisse  Generate  de  Retraite.  The  '^premature  in- 
validity" insurance  is  to  be  carried  in  mutual  associa- 
tions or  regional  funds.  The  principal  features  of  the 
sickness  insurance  are  as  follows : 

The  insurance  is  to  be  carried  in  approved  mutual 
associations  or  regional  funds,  the  latter  to  be  admin- 
istered by  boards  composed  of  representatives  of  the  mu- 
tual invalidity  associations,  the  trade  unions,  the  medical 
profession,  the  pharmacists,  and  the  insured — the  repre- 
sentatives of  the  insured  to  be  selected  by  the  govern- 


48 


49 


ment.  Each  workman  subject  to  the  law  is  to  have  free 
choice  of  his  insurance  carrier.  Contributions  by  the  in- 
sured, in  the  mutuals  are  to  be  at  such  rates  as  each  asso- 
ciation may  fix  by  its  rules,  and  in  the  regional  funds  at 
the  rate  of  twelve  francs  per  year,  which  rate,  however, 
may  be  reduced  one  half  for  those  earning  less  than  fif- 
teen francs  per  week.  The  employer  is  to  collect  and  re- 
mit his  employee's  contributions,  unless  furnished  with  a 
certificate  that  the  employee  is  paying  direct.  Employers, 
unless  they  provide  due  medical  care,  miist  contribute  two 
francs  per  each  insured  employee  per  year.  The  state 
is  to  contribute  25  centimes  for  every  franc,  up  to  twelve, 
contributed  annually  by  each  insured  person.  For  in- 
sured persons  bom  before  December  31,  1870,  this  con- 
tribution is  to  be  doubled.  Additional  subsidies  are  to 
be  made  to  secure  medical  service  to  those  of  the  insured 
who  live  far  from  a  doctor,  and  for  those  associations  and 
funds  which  provide  maternity  benefits.  Subsidies  to  the 
insurance  by  the  Provinces,  Communes,  etc.,  are  contem- 
plated; and  it  is  provided  that  in  such  subsidies  no  dis- 
crimination shall  be  made  against  mutual  associations 
because  of  their  religious  or  political  character,  and  that, 
except  as  to  maternity  benefits,  the  subsidies  must  not 
be  proportionate  to  expenditures  but  must  be  either  fixed 
or  proportionate  to  contributions.  The  minimum  bene- 
fits to  be  insured  are :  (1)  A  medical  and  pharmaceutical 
service,  unless  otherwise  provided.  (2)  **Sick  pay''  of 
not  less  than  one  franc  a  day,  beginning  not  later  than 
the  tenth  day  of  disability  and  continuing  for  three 
months,  when  the  invalidity  insurance  shall  take  effect. 
The  insured  have  free  choice  of  physician  among  those 
physicians  of  the  neighborhood  who  accept  the  tariff 
adopted  by  the  regional  fund.  The  mutual  associations 
may  reject  members  for  bad  health,  but  may  not  drop  a 
member  for  such  reason  after  one  year's  membership. 
And  the  mutuals  must  provide  a  ** control"  by  adminis- 
trators or  visitors,  independent  both  of  the  insured  and 
of   their    employers.     The    bill    provides    a    credit    of 


5,000,000  francs  to  assist  in  establishing  sanatoria  for  the 
insured  suffering  from  contagious  diseases,  especially 
tuberculosis. 

France,  Apart  from  the  insurance  special  to  miners 
and  seamen,  what  is  classed  as  ** sickness  insurance"  in 
France,  is  voluntary,  in  certain  publicly  ** approved"  or 
semi-approved  (**free")  mutual  societies,  insuring  vari- 
ously all  sorts  of  benefits  in  case  of  sickness,  invalidity, 
old-age,  death,  etc.  Associations  for  mutual  aid  were 
first  fully  legalized  in  France  in  1850,  but  subject  to  such 
vexatious  political  interferences  that  normal  progress 
was  hindered.  Since  1898,  however,  associations  for 
mutual  benefit  have  been  fairly  regulated,  and  moreover 
subsidized  by  the  state — the  ** approved"  societies,  which 
submit  to  the  greatest  public  regulation  and  supervision, 
being  subsidized  quite  liberally,  the  **free"  societies, 
more  independent  in  their  methods,  less  liberally.  As  a 
consequence  of  this  new  policy,  the  number  of  the  in- 
sured in  such  societies  (children's  or  ** scholastic"  socie- 
ties excluded)  has  increased  from  1,891,482,  in  1901,  to 
3,747,176,  in  1912,  and  was  reported  to  be  still  increasing 
steadily  at  the  outbreak  of  the  war. 

To  the  foregoing  figures  should  be  added  the  mem- 
bers of  officially  unrecognized  mutual  aid  societies, 
amounting,  it  is  said,  to  several  millions — the  total  in- 
sured in  all  mutual  aid  societies,  children  included, 
amounting,  we  are  informed  by  one  authority,  to  over 
7,000,000  in  1913.  From  this  total,  however,  a  consider- 
able reduction  must  be  made  to  get  the  number  insured 
against  sickness,  some  of  the  societies  not  providing  that 
line  of  insurance. 

The  following  figures  of  receipts  and  expenditures  of 
the  *' approved"  and  *' free  "societies,  for  the  year  1912, 
fairly  outline  their  sources  of  income  and  activities : 


. 


50  • 

Receipts. 

Contributions  of  participating  members 19,816,026 

Contributions  of  honorary  members 973,260 

Fines  and  entrance  fees 1,579,468 

Subsidies,  national  and  local 2,346,182 

Donations  and  legacies 686,510 

Interest  on  investments 2,854,676 

Total  $18,256,152 

Disbursements. 

Expenditures  on  account  of  sickness $5,914,000 

Pensions,  allowances,  etc 1,592,297 

Funeral  expenses   !!....!!!  354,839 

Aid  to  widows,  orphans,  aged  persons,  etc 867^564 

Cost  of  administration 672,717 

Miscellaneous   2,150,737 

Payments  for  old  age  insurance  in  Caisse  Rationale  l[62l!442 

Total  $13,173,596 

Assets  Dec.  31,  1912 $124,173,596 

It  is  objected  to  this  voluntary  insurance  that  it  does 
not  reach  well  down  among  the  industrial  wage-earners 
—that  a  high  proportion  of  its  members  are  of  the  higher 
'  *  employee ' '  and  ' '  artisan ' '  classes.  To  some  extent  that 
has  undoubtedly  been  true,  because  in  France  the  trade 
unions,  elsewhere  a  powerful  influence  in  promoting  social 
insurance,  generally  have  concentrated  their  efforts  on 
politics,  and  have  been  indifferent  if  not  hostile  to  con- 
tributory insurance,  their  political  demand  being  for 
free  pensions  during  '* invalidity'' — short  or  long.  But 
there  is  good  reason  to  believe  that  when  progress  was 
halted  by  the  war  voluntary  mutual  benefit  insurance 
covering  sickness  was  steadily  winning  its  way  among 
labor  in  organized  industries. 

The  principal  objection  to  this  French  voluntary  in- 
surance is  its  relatively  small  extension.  In  1912  the 
officially  recognized  societies  insured  against  sickness 
barely  9%  of  the  population — or,  according  to  some  hos- 
tile critics,  only  5.75%  in  1910— as  against  21%  for  the 
German  sickness  societies  in  1910.  But  that  comparison 
is  misleading.  There  seems  to  be  much  insurance  in 
France  outside  of  the  officially  recognized  societies.  The 
German  figures  for  1910  represent  26  years  of  develop- 


f 


51 

ment  by  compulsion;  whereas  the  French  figures  for  1912 
represent  only  14  years  of  development  by  the  slower 
inducement  of  small  subsidies.  And  finally  the  relative 
extent  of  the  need  for  sickness  insurance  differs  in  the 
two  countries.  Germany  is  predominantly  a  country  of 
grand  industries  and  low  paid  wage-earners.  In  con- 
trast, outside  of  a  fair  number  of  industrial  centers, 
whereto  this  sickness  insurance  is  principally  confined 
and  wherein,  consequently,  it  covers  a  relatively  much 
higher  proportion  of  the  working  people  than  the  gen- 
eral average,  France  is  predominantly  a  country  of  agri- 
culture and  petty  industries,  with  an  exceptionally  high 
proportion  of  independent  or  semi-independent  artisans. 
These  French  classes  are  notorious  for  their  thrift  and 
self-providence.  It  is  not  to  be  assumed  that,  because 
a  large  percentage  of  them  are  not  recorded  in  any  gov- 
ernment bureau  as  prospective  beneficiaries  of  a  state 
fostered  insurance  scheme,  therefore  they  are  unprovided 
against  sicknesss.  And  for  the  very  poor,  the  medical 
benefits  provided  by  compulsory  insurance  are  supplied 
throughout  France  by  free  public  medical  assistance. 
That  public  medical  service  may  be  so  poor  and  deficient 
as  to  invite  criticism;  but,  judging  from  experience  in 
Great  Britain,  it  is  no  worse  than  the  medical  service  that 
would  probably  be  provided  under  compulsory  sickness 
insurance. 

There  are  many  factors  in  the  French  social  insurance 
situation  that  are  uncertain.  Figures  obtained  from  repu- 
table sources  vary  exceedingly.  And  data  as  to  many 
most  material  factors  are  wholly  unobtainable.  Much 
remains  to  be  learned  by  future  investigation  and  ex- 
perience before  a  correct  judgment  can  be  reached  for 
or  against  this  social  insurance  system. 

As  has  been  indicated  above,  miners'  insurance  in 
France  is  in  a  class  by  itself.  From  very  early  times 
mutual  aid  societies,  insuring  medical  care,  sick  pay, 
funeral  expenses  and  old  age  annuities  (now  through 
reinsurance  in  the  Caisse  Nationale),  have  existed  among 


' 


52 

the  miners  of  France,  as  of  other  countries.  In  1894,  the 
French  Government  adopted  this  insurance,  which  had 
freely  developed  in  the  old  mines,  made  it  general  by  com- 
pulsion, and  required  all  employers  to  contribute  one- 
third  of  the  cost.  In  1913  there  were  242,894  insured 
members.  This  insurance  has  been  satisfactory  in  the 
older  mining  districts  and  has  been  deemed  necessary, 
although  not  operating  quite  so  well,  in  the  new  mines, 
manned  largely  by  floating,  immigrant  labor. 

The  recovery  of  the  lost  provinces  of  Alsace  and  Lor- 
raine has  created  a  curious  social  insurance  situation  in 
France.  These  two  provinces  have  brought  with  them 
the  German  invalidity  and  sickness  insurance,  and  pro- 
pose and  will  undoubtedly  be  allowed  to  retain  it.  It  may 
be  doubted  whether  the  invalidity  insurance  will  continue 
to  function  satisfactorily  without  the  firm  hand  of  the 
German  autocracy  on  the  cash  spigot,  and  there  are  seri- 
ous troubles  ahead  for  its  finances;  but  the  sickness  in- 
surance, being  as  yet  confined  to  organized  industries  and 
carried  largely  in  establishment  funds,  beyond  the  nor- 
mal reach  of  politics,  may  perhaps  not  give  rise  to  many 
difficulties.  This  inroad  of  the  German  system  has  given 
new  life  to  the  party  favoring  the  adoption  of  compul- 
sory sickness  insurance  throughout  France.  It  remains 
to  be  seen  how  the  French  working  people,  who  have 
manifested  no  uncertain  hostility  to  compulsory  inva- 
lidity insurance,  will  welcome  this  new  proposal.  And 
if  it  should  be  adopted,  it  would  still  remain  to  be  seen 
how  compulsory  insurance  will  work,  when  applied  to 
a  free  people,  by  a  feeble  government  with  continually 
changing  politics. 

Switzerland.  Under  the  Federal  law  of  June  13, 1911 
(for  the  text  of  which,  see  Bulletin  of  U.  S.  Bureau  of 
Labor,  No.  103),  which  became  effective  in  1914,  mutual 
benefit  societies  (religious,  political,  public  or  other- 
wise), recognized  as  complying  with  the  provisions  of 
the  law  and  insuring  either  a  certain  minimum  medical 


53 


care  when  needed  or  at  least  one  franc  per  day  **sick  pay" 
during  absolute  disability,  for  at  least  180  days  per  year, 
or  both,  are  entitled  to  Federal  subsidies.  That  law  also 
confers  upon  the  Cantons  the  power,  within  their  respec- 
tive jurisdictions,  to  make  the  insurance  compulsory, 
either  generally  or  for  certain  classes  of  persons ;  to  es- 
tablish public  funds,  without  barring  the  recognized  so- 
cieties; to  require  employers  to  collect  their  employees' 
contributions,  but  not  to  require  employers  themselves 
to  contribute;  and  to  delegate  these  powers  to  their  re- 
spective Communes. 

At  the  end  of  1918  three  Cantons  and  a  large  number 
of  Communes  in  eight  other  Cantons  had  made  the  insur- 
ance compulsory,  variously  for  transient  labor  or  the 
poorer  workers — i.e.,  those  earning  not  to  exceed  1,500 
or  2,000  francs  (or  2,500  or  3,000  francs  in  the  enactments 
subsequent  to  the  recent  rise  in  wage  and  price  levels), 
if  married,  or  1,000  or  1,500  francs,  if  single — their  wives 
and  children,  etc. 

At  the  end  of  1917  the  number  of  insured  members 
of  recognized  societies  (counting  twice  those  insured  in 
two  societies)  we^ — men,  379,039;  women,  185,187;  chil- 
dren, 65,701 ;  total,  629,927  in  a  population  of  3,700,000. 

Before  this  law  took  effect  there  were  already  sup- 
posed to  be  well  over  500,000  persons  insured  in  mutual 
benefit  societies  in  Switzerland,  and  it  was  estimated  that 
the  law  would  promptly  increase  the  number  to  800,000 
—660,000  in  voluntary  societies  and  140,000  in  public 
funds  in  the  Cantons  and  Communes  in  which  the  insur- 
ance would  be  made  compulsory.  But  the  disorder  cre- 
ated by  the  war  has  doubtless  retarded  development. 

Owing  to  the  facts  that  some  of  the  recognized  socie- 
ties had  not  yet  qualified  for  the  Federal  subsidies  and 
that  in  case  a  person  is  insured  in  two  societies  only  one 
subsidy  is  paid,  the  number  of  the  insured  for  whom 
Federal  subsidies  were  paid  in  1917  was  only  531,803. 
The  Federal  subsidies  vary  in  proportion  to  the  benefits, 


54 

ranging  from  3  fr.  50  to  5  fr.  50  per  capita  per  annum. 
If,  through  inability  to  make  a  satisfactory  contract  with 
physicians,  a  society  with  the  approval  of  the  authori- 
ties substitutes  an  extra  cash  benefit  in  place  of  a  medical 
benefit,  the  subsidy  as  for  a  medical  benefit  is  neverthe- 
less payable.  The  Cantons  and  Communes  also  variously 
subsidize  the  societies  and  public  funds  for  the  benefit  of 
their  local  members. 

Principally  to  indicate  the  sources  and  extent  of  the 
various  subsidies,  the  receipts  of  all  the  funds  for  the 
year  1917  are  here  given,  as  follows: 

Contributions  of  active  members . .  11,830,613  fr. 

Contributions  of  passive  members 15,610  f r. 

Subsidies  from  Cantons 618,562  fr. 

Subsidies  from  Communes 121,045  fr. 

Subsidies  from  employers — regular   527,606  fr. 

Subsidies  from  employers — occasional 349,284  fr. 

Subsidies  from  Republic — regular 2,230,852  fr. 

Subsidies  from  Republic — special 201,200  fr. 

As  may  be  calculated  from  the  foregoing  the  average 
annual  contribution  per  insured  member  was  about  19 
francs  ($3.80) — probably  a  little  more. 

The  annual  reports  of  the  *^ Office  Suisse  des  Assur- 
ances 8ociales'\  from  which  the  fbregoing  data  is 
abstracted,  give  information  suflficient  to  picture  clearly 
how  the  machinery  for  this  insurance  system  is  being 
built  up,  but  not  sufficient  to  give  any  idea  of  how 
efficiently  it  is  working. 

To  understand  the  why  and  wherefore  of  many 
features  of  this  mixed  system  of  insurance,  it  is  necessary 
to  go  back  to  1899.  In  that  year  a  Federal  act  was 
passed  by  the  National  Assembly  for  compulsory  acci- 
dent and  sickness  insurance,  in  government  institutions, 
of  all  classes  of  wage-workers  earning  not  to  exceed  about 
$1,000  a  year.  That  law  aroused  bitter  opposition,  and, 
upon  referendum,  was  defeated  by  a  vote  of  over  two  to 
one.  The  present  law  is  a  sort  of  compromise  substitute 
for  the  rejected  act.  Its  principles  may  be  said  to  be: 
Hands  off  the  mutual  benefit  associations!    Free  choice 


i 


r 


55 

of  insurance  carrier!  Home  rule!  Compulsory  insur- 
ance only  for  the  submerged  tenth !  It  is  a  new  experi- 
ment.   And  it  will  take  time  to  learn  how  it  works. 

Comparative  sick  rates.  The  following  data  are  in- 
structive to  indicate  the  efficiency  of  the  control  exercised 
by  various  types  of  insurance  societies  over  claims  for 
**sick  pay'\  The  abnormal  rate  at  which  sickness — real 
or  feigned — has  increased  in  Germany,  is  to  be  noted. 
That  increase  may  be  partly  explained  by  reductions  in 
waiting  periods  and  lengthening  period  of  benefits;  but 
not  altogether. 

Cases  of  Sickness  Per  100  Members. 


1898 

1901 

1910 

1911 

1912 

1913 

German  Societies 

35 

■   • 

•   • 

43.3 

•  • 

45.6 

French  Approved* 

33.28 

•   • 

20.99 

•   • 

•  • 

•  • 

French  Free 

33.60 

•  • 

18.33 

•  • 

•  • 

•  • 

Swedish — male  . . 

•  • 

30.5 

•  • 

•  • 

31.6 

•  • 

Swedish — female 

•  • 

25.3 

•  • 

•  • 

22.9 

•  • 

Days  of 

Sickness  Per 

100  Members. 

1898 

1901 

1910 

1911 

1912 

1913 

German  Societies 

616 

•  • 

•  • 

853 

•  • 

919 

French  Approved*  712 

•  • 

461 

•  • 

French  Free 

623 

•  • 

367 

•   « 

Swedish — male  .. 

•   • 

590 

•  • 

696.9 

Swedish — female 

•  • 

590 

•  • 

666.2 

Danish — male  ... 

•  • 

•  • 

480 

•  • 

Danish — female. . 

•  • 

•  • 

480 

•  • 

Days  of  Sickness 

Per  Case. 

1898 

1901 

1910 

1911 

1912 

1913 

German    Societies 

17.6 

•  • 

•  • 

W.7 

•  • 

20.2 

French  Approved*  21.39 

•  • 

21.96 

•  • 

•  • 

•  • 

French  Free 

18.55 

«    • 

18.33 

•   • 

•  • 

•  • 

Swedish — male . . . 

•   • 

19.5 

•   • 

•  • 

22.1 

•  • 

Swedish — female 

•  • 

23.4 

•  • 

29.2 

•   • 

1917 


440 
440 


Comments,  From  the  foregoing,  and  from  facts  as  to 
British,  German  and  Austrian  social  insurance  presented 
elsewhere  or  already  generally  known,  it  should  be  clear 
that,  besides  adoption  of  the  principle  of  compulsion, 
there  are  many  other  features  in  the  measures  for  com- 
pulsory sickness  insurance  that  have  been  proposed  in 
this  country  as  to  which  European  precedents  and  ex- 
perience are  adverse,  doubtful  or  conflicting. 

*  Adult  societies  only. 


II 


56 

It  is  proposed  that  we  should  start  in  here  with  a 
jump,  creating  by  legislative  fiat  a  novel  sickness  insur- 
ance system,  of  universal  application  to  wage-workers. 
No  experiment  of  that  kind  has  yet  succeeded  in  Europe. 
The  German  system  has  been  built  up  slowly,  by  gradual 
extension,  using  pre-existing  voluntary  insurance  organi- 
zations as  a  basis,  and  when  the  war  broke  out,  after  36 
years  of  development,  had  not  yet  reached  the  classes  of 
labor  most  difficult  to  suit  by  a  bureaucratic  scheme. 

It  is  proposed  here  that  we  should  apply  compulsion 
to  all  wage-workers,  or  at  least  to  all  wage-workers  earn- 
ing less  than  $1200  per  year  (at  pre-war  wage  scales), 
whereas  in  Europe  compulsory  sickness  insurance  is  com- 
ing more  and  more  to  be  regarded  as  a  medium  for  poor 
relief,  to  be  applied  only  to  the  very  lowly  paid. 

It  is  proposed  here  that  the  provision  of  all  needed 
medical  care  shall  be  incorporated  as  a  primary  and  es- 
sential function  of  sickness  insurance,  whereas  in 
Europe,  after  trials  of  many  variegated  methods  of 
providing  medical  care  through  sickness  insurance,  the 
conviction  is  spreading  that  it  does  not  work  well;  and 
one  of  the  latest  precedents  (Holland)  omits  all  medical 
benefits,  and  two  other  late  precedents  contain  provisions 
opening  the  door  for  the  substitution  of  an  extra  cash 
benefit  (Norway  and  Switzerland)  in  place  of  the  medical 
benefits. 

It  is  proposed  here  that  sickness  insurance  and  the 
carriers  of  such  insurance  shall  be  stereotyped  and  sub- 
ject to  public  control  and  dictation  in  every  material  de- 
tail and  particular,  and  that  the  persons  to  be  insured 
shall  be  distributed  among  and  assigned  to  insurance 
carriers  in  the  discretion  of  a  political  board,  whereas 
in  Europe  it  is  widely  considered  essential,  even  where 
the  principle  of  compulsory  contributions  is  accepted,  that 
the  politicians  shall  keep  their  hands  off  the  insurance 
carriers  and  that  the  insured  shall  have  full  liberty  of  as- 
sociation for  insurance,  with  a  wide  choice  as  to  their 


/ 


1  " 


\ 


i 


] 


57 

insurance  carriers  and  as  to  the  form,  amount  and  kind 
of  their  insurance. 

It  is  proposed  here  that  employers  shall  be  compelled 
to  contribute  fixed  percentages  of  the  insurance  pre- 
miums, whereas  in  Europe  that  practice  is  beginning  to 
be  recognized  as  uselessly  troublesome  and  expensive 
and  to  be  delusive  as  to  its  supposed  advantages  for  the 
insured  wage-earners,  wherefore  employers'  compulsory 
contributions  have  been  dropped  in  the  recent  Swiss  sick- 
ness insurance  law  and  the  recent  Swedish  compulsory 
invalidity  insurance  law. 

It  is  proposed  here  to  insure  all  the  **bad  risks''  on 
the  same  terms  and  conditions  as  the  **good  risks, '^ 
whereas  in  Europe  there  are  signs  of  an  awakening,  even 
in  the  compulsory  insurance  countries,  to  the  inexpedi- 
ency and  wrongfulness  of  that  policy. 

There  is  much  yet  to  be  learned  about  European  ex- 
perience, and  to  be  studied,  weighed  and  measured,  be- 
fore the  lessons  of  that  experience  can  be  at  all  correctly 
applied  to  framing  the  provisions  of  either  a  compulsory 
or  state  subsidized  sickness  insurance  law,  should  we 
eventually  conclude  to  adopt  either.  In  the  meantime  it  is 
unconscionable  to  seek  to  persuade  the  American  people 
to  prejudge  all  the  questions  of  choice  of  methods  in- 
volved, and  to  adopt  not  merely  compulsory  sickness  in- 
surance, but  even  the  most  autocratic,  bureaucratic  and 
exotic  form  of  such  insurance,  in  the  false  belief  that 
thereby  they  would  be  following  the  settled  judgment 
of  European  opinion,  based  upon  experience. 

J.  W.  Sullivan, 
Arthur  Williams, 
P.  Tecumseh  Sherman, 
Frederick  L.  Hoffman. 


^ 


THE  LOW  LEVEL  OF  THE  EUROPEAN 
COMPULSORY   INSURANCE. 

The  American  wage-worker,  hearing  much  about  the 
security  against  •  economic  misfortunes  enjoyed  by  the 
workers  in  Europe,  will  naturally  be  interested  in  the 
** benefits''  and  ** dues''  in  connection  with  foreign  social 
insurance.  The  following  is  a  brief  presentation  of  the 
complete  benefits  under  the  German  and  the  British  social 
insurance  systems,  occupational  accident  compensation 
being  omitted  as  an  extrinsic  matter. 

Germany. 

As  a  preliminary  it  should  be  noted  that — 

Germany  has  no  unemployment  insurance,  either  for 
the  empire  or  the  separate  states.  German  municipalities 
have  only  in  a  few  instances  local  unemployment  insur- 
ance, the  methods  not  uniform. 

Germany  has  no  gratuitous  old-age  pension  system 
(i.e.,  obtained  without  previous  contributions  from  the 
beneficiaries),  such  as  Great  Britain's. 

Germany's  social  insurance  is  a  coordinated  accident, 
sickness,  invalidity,  old-age  and  survivors '  insurance  sys- 
tem, requiring  two  separate,  regular  contributions  (oblig- 
atory dues)  from  the  insured  workman  during  his  matur- 
ity and  while  employed. 

As  to  the  benefits  and  dues,  it  is  first  to  be  noted  that 
in  sickness  insurance  the  costs  and  benefits  varv  in  the 
different  societies,  but  there  is  no  data  in  regard  there- 
to available  under  the  amended  law  of  1911 — which  was 
just  being  put  into  effect  when  the  war  broke  out  in  1914. 
Under  the  amended  invalidity  law,  however,  the  costs  and 
benefits  are  fixed.  Hence  in  what  follows  reference  is 
generally  to  the  old  law  for  the  sickness  insurance  and 
to  the  new  law  for  the  invalidity  insurance. 


58 


59 


The  benefits  of  the  sickness  insurance  consist  of  medi- 
cal care;  a  cash  benefit,  called  **sick  pay":  care  in  the 
home  or  in  the  hospital,  together  with  an  allowance  for 
the  family  in  case  of  hospital  treatment;  a  pecuniary 
benefit  in  maternity  cases  for  a  period  of  eight  weeks; 
a  funeral  benefit,  consisting  of  twenty  times  the  amount 
of  the  estimated  average  daily  wage  of  the  insured  per- 
son, but  not  less  than  fifty  marks  ($11.90).  These  are 
prevailing  rates.  Individual  sick  funds  are  allowed  to 
vary  these  benefits  in  different  ways,  and  in  certain  cases 
also  to  extend  their  amount  and  duration.  The  average 
'*sick  pay"  for  the  year  1910  was  about  30  cents  per  day, 
or  $1.80  per  week. 

Medical  care  begins  with  the  beginning  of  sickness. 
Pecuniary  sick  benefit,  generally  to  the  amount  of  one- 
half  the  basic  wage  for  each  working  day,  if  the  sickness 
incapacitates  the  insured  person  from  work,  usually  be* 
gins  with  the  fourth  day  of  disability  and  terminates  with 
the  expiration  of  the  twenty-sixth  week.  The  sickness 
insurance  is  maintained  by  contributions  from  employers 
and  employees,  the  employees  paying  two-thirds.  The 
state  does  not  contribute  to  the  funds,  but  lends  its  aid 
in  many  ways.  The  methods  of  fixing  contributions  and 
cash  benefits  are  too  complex  to  be  detailed;  (see  '* Social 
Insurance  in  Germany,"  by  W.  Harbutt  Dawson).  The 
combined  contributions  of  employer  and  employee  vary 
between  3%  and  6%  of  '* basic  wages,"  such  wages  lim- 
ited not  to  exceed  $1.44  per  day.  The  average  combined 
contribution  in  1910  was  about  3%. 

The  old-age  and  invalidity  insurance  is  state  adminis- 
tered and  is  compulsory  for  those  wage-workers  whose 
earnings  fall  below  a  designated  maximum.  One-half 
the  assessments  or  dues  are  paid  by  the  insured  and  one- 
half  by  the  employer,  while  the  state  adds  to  each  pension 
an  annual  subsidy  of  fifty  marks  ($11.90).  The  wage- 
earners  are  graded  in  five  wage-earning  classes,  accord- 
ing to  each  individual's  estimated  average  annual  earn- 


fj 


60 

ings,   not   necessarily  his   actual   earnings.    The   wage 
classes  and  weekly  contributions  are: 


Wage  Group.        Annual  Earnings. 

I.  350  Marks  or  under  ($83.30  or  under) 

II.  350  to  550  Marks  ($83.30  to  $130.90) . . 

III.  550  to  850  Marks  ($130.90  to  $202.30) 

IV.  850  to  1150  Marks  ($202.30  to  $273.70) 
i          v.  1,150  Marks  or  over  ($273.70  or  over)  . . 


Weekly-Contributions. 
Pfennigs.    Cents. 

16 


24 
32 
40 
48 


3.8 
5.7 
7.6 
9.5 
11.4 


The  benefits  provided  by  this  insurance  are  *' sickness 
pensions^'  (generally  following  the  expiration  of  and  to 
be  distinguished  from  the  **sick  pay'*  under  the  sickness 
insurance)  for  temporary  invalidity,  ** invalidity  pen- 
sions^' for  permanent  invalidity,  ** old-age  pensions,*'  and 
finally  ** survivors'  pensions,"  besides  medical  treatment, 
care  in  institutions,  etc.,  in  the  discretion  of  the  insur- 
ance carrier.  The  sickness  and  invalidity  pensions  being 
at  the  same  rate  may,  for  convenience,  both  be  called 
** invalidity  pensions,"  to  distinguish  them  from  the  cash 
benefit  under  the  sickness  insurance  law. 

To  become  entitled  to  benefits,  the  insured  person  must 
have  paid  regular  dues  for  specified  periods,  designated 
as  ** waiting  time." 

For  invalidity  pensions  the  waiting  period  is  200 
weeks,  during  which  at  least  100  weekly  contributions 
must  have  been  made ;  otherwise  the  waiting  time  is  500 
weeks. 

The  invalidity  pension  begins  usually  at  the  termina- 
tion of  twenty-six  weeks  of  sickness  benefit  and  the 
amount  (made  up  of  a  basic  sum,  a  supplementary  in- 
crease, and  an  imperial  subsidy),  is  graduated  according 
to  the  five  wage-classes  above  mentioned  and  according 
to  the  number  of  contributions.  The  lowest  invalidity 
pension,  in  the  lowest  class,  is  116  marks  ($27.70)  per 
year.  The  highest  possible  attainable,  in  the  highest 
class,  for  fifty  years'  continuous  contributions,  is  about 
$2.08  per  week.  For  thirty-four  years'  contributions  in 
the  middle  class,  the  pension  is  about  $1.24  per  week. 


61 

For  old-age  pensions,  the  waiting  time — 1,200  weeks 
of  contributions — is  more  than  twenty-three  years. 

The  annual  amount  of  the  old-age  pension,  payable  at 
the  age  of  sixty-five  (formerly  seventy)  to  those  insured 
in  each  of  the  five  above  specified  classes  of  wage-earn- 
ers is  here  given  in  tabulated  form  in  order  to  be  read 
at  a  glance : 


Insurance  Pension.        State  Subsidy. 
Class.    Marks.    Dollars.        Marks.    Dollars. 


Total  Pension. 
Marks.    Dollars. 


1. 

II. 

III. 

IV. 

V. 


60 

90 

120 

150 

180 


14.28 
21.42 
28.56 
35.70 
42.84 


50 
60 
50 
50 
60 


11.90 
11.90 
11.90 
11.90 
11.90 


110 
140 
170 
200 
230 


26.18 
33.32 
40.46 
47.60 
54.74 


As  the  wage-earners  usually  shift  from  one  wage- 
earning  class  to  another  during  the  time  they  are  paying 
dues,  probably  no  individual  will  receive  exactly  any  one 
of  these  specified  amounts  but  something  in  between  some 
two  of  them. 

If  an  insured  workman  qualifies  for  both  an  invalidity 
and  an  old-age  pension,  he  is  paid  the  larger. 

Survivors'  pensions  are  payable  to  invalid  widows, 
and  to  children  and  orphan  grandchildren  under  fifteen 
years  of  age,  upon  the  decease  of  a  workman  who  has 
qualified  for  an  invalidity  pension.  The  widows '  pension 
is  three-tenths  of  the  total  of  the  basic  sum  and  supple- 
mentary increase  of  the  deceased  workman's  invalidity 
pension,  plus  fifty  marks  a  year  payable  during  invalidity, 
the  first  orphans '  pension  is  three-twentieths  of  the  total 
of  the  same  sums,  plus  twenty-five  marks,  and  each  addi- 
tional orphan 's  pension  is  one-twentieth,  plus  twenty-five 
marks,  payable  in  each  case  until  the  child  reaches  the  age 
of  fifteen,  whereupon  a  small  settlement  is  paid  it.  If  a 
workman  in  the  medium  wage  class  dies  after  making 
700  weekly  contributions  leaving  an  invalid  widow  and 
three  young  children,  the  widow's  pension  will  be  about 
78.80  marks  ($18.81)  per  annum,  the  first  child's  pension 
will  be  about  37.20  marks  ($9.50)  per  annum,  and  the 


\A 


I 


62 

pension  for  each  of  the  younger  children  will  be  about 
29.90  marks  ($7.17)  per  annum. 

To  illustrate  the  operation  of  the  sickness,  invalidity, 
old-age  and  survivors '  insurance,  the  case  may  be  taken 
of  a  German  wage-worker  earning  six  dollars  a  week  and 
consequently  in  the  highest  wage  class.  (The  average 
payments  and  pensions  of  the  lower  wage  classes  are  of 
course  less.) 

On  the  average,  a  workman  with  wages  of  six  dollars 
per  week  would  pay  for  the  sickness  insurance  sixteen 
cents  weekly  and  for  the  invalidity  insurance  six  cents ; 
(this  latter  contribution,  however,  will  have  to  be  in- 
ceased  because  of  the  recent  reduction  of  the  age  of  re- 
tirement from  70  to  65).  These  are  the  figures  for  the 
deductions  from  his  wages,  and  do  not  include  any  contri- 
butions except  his  own.    In  return  he  would  receive : 

Under  the  sickness  insurance,  besides  the  medical 
benefit,  a  weekly  payment  of  about  $3.30  (the  average 
rate  being  nearer  55  than  50  per  cent  of  basic  wages) 
for  not  to  exceed  a  number  of  weeks  which  varies  in  the 
different  societies,  generally  twenty-six,  and  beginning 
at  a  different  date  in  the  different  societies  but  generally 
on  the  fourth  day  of  disability. 

Under  the  invalidity,  old  age  and  survivors'  insur- 
ance, the  cash  benefits  would  be  as  follows : 

Conditioned  upon  his  having  made  1,200  weekly  con- 
tributions, upon  reaching  the  age  of  65  (formerly  70) 
years,  he  would  be  entited  to  an  old-age  pension  of  230 
marks  annually,  or  about  $1.05  weekly. 

Conditioned  upon  having  made  200  weekly  contribu- 
tions, if  he  should  become  a  permanent  invalid  at  any 
time,  he  would  be  entitled  to  an  invalidity  pension,  vary- 
ing in  proportion  to  the  number  of  weekly  contributions 
made;  for  examples: 

If  he  had  made  500  weekly  contributions  his  pension 
would  be  210  marks  annually,  or  ninety-seven  cents 
weekly. 


" 


63 

If  he  had  made  1,763  weekly  contributions  (thirty- 
four  years)  he  would  be  entitled  to  an  annual  pension  of 
362  marks,  or  about  $1.67  weekly. 

And  if  he  should  die  after  having  made  500  weekly 
contributions,  leaving  an  invalid  widow  and  a  child  un- 
der 15,  his  widow  would  receive  a  pension  of  about  98 
marks  ($22.54)  per  annum,  and  his  child  a  pension  of 
about  49  marks  ($11.27)  per  annum. 

It  is  to  be  noted  that  the  sickness  insurance  is  linked 
up  very  closely  in  certain  ways  with  the  accident  insur- 
ance. The  sickness  insurance  covers  disability  by  acci- 
dent, occupational  or  otherwise,  for  the  first  thirteen 
weeks.  That  fact,  combined  with  the  fact  that  in  about 
84  per  cent  of  all  occupational  accident  cases  disability 
terminates  within  those  thirteen  weeks,  is  generally  esti- 
mated to  reduce  the  cost  of  accident  compensation  paid 
by  employers  on  the  average  to  about  54  per  cent  of  aver- 
age earnings.  But  that  is  not  the  only  important  con- 
sequence. Under  the  German  composite  accident-sick- 
ness law,  the  sickness  insurance  bears  the  cost  of  medi- 
cal treatment  entirely  for  the  first  thirteen  weeks,  except 
where  in  serious  cases  the  accident  insurance  associations 
may  elect  to  intervene ;  whereas  under  the  American  acci- 
dent compensation  laws  the  employers  pay  the  medical 
cost,  within  certain  time  and  other  limitations.  A  part 
— some  investigators  say  a  greater  part — of  the  medical 
cost  in  Germany  is  in  exaggerated  fees  for  treatment 
of  trifling  injuries.  Consequently  the  result  of  the  Ger- 
man law  is  to  impose  far  the  greater  share  of  the  medical 
cost  in  occupational  accident  cases  on  the  sickness  socie- 
ties, with  the  result  that  at  least  two-thirds  of  it  comes 
from  the  contributions  of  the  working  people.  The  total 
result  is  that  under  the  American  accident  compensation 
laws,  even  with  only  50  per  cent  compensation,  the  injured 
workmen  get  more  at  the  expense  of  their  industry  than 
under  the  German  law  with  its  nominal  66  2/3  per  cent 
rate  of  compensation. 


t 


64 

Great  Britain 

Under  the  social  insurance  laws  of  Great  Britain  the 
highest  money  benefits,  translated  roughly  into  American 
money  at  pre-war  rates  of  exchange,  are  :* 

Sickness  payments  for  men  (approximately)  thirty- 
five  cents  a  day ;  for  women,  twenty-six  cents.  Weekly— 
$2.43  for  men,  $1.82  for  women.  In  a  year  (no  more 
than  twenty-six  payments)— men,  $63.20;  women,  $47.35. 
The  beneficiary  is  entitled  also,  within  narrow  limits,  to 
free  medical  treatment  and  medicines. 

The  total  maternity  benefit  to  an  insured  woman  or 
the  wife  of  an  insured  man  is  thirty  shillings  ($7.30). 

Disablement  (or  invalidity)  payments,  payable  to 
either  men  or  women,  are  about  171/2  cents  a  day— $1.22 
per  week— payable  up  to  the  age  of  seventy. 

The  old-age  pension,  payable  to  a  man  or  woman 
seventy  years  of  age  but  conditioned  upon  indigency,  is 
now  about  $2.43  (until  recently  $1.22)  per  week. 

The  regular  unemployment  benefit  (operative  in  only 
a  few  occupations)  now  amounts  to  about  $2.67  (until 
recently  $1.70)  per  week.  In  fifty-two  weeks  the  total 
amount  permitted  to  be  drawn— fifteen  weeks'  benefit- 
is  $40.10  (until  recently  $25.51).  (After  the  war  there 
was  for  a  time  allowed  indiscriminately  a  special  unem- 
ployment'* dole ' '.) 

That  completes  the  list  of  all  forms  of  British  gov- 
ernment working  class  insurance  benefits.  That's  the 
whole  scheme. 

To  qualify  himself  for  his  compulsory  benefits,  the 
British  wage-worker  must  observe  many  requirements. 

For  sickness  insurance  he  must  first  obtain  from  the 
government  a  card;  he  cannot  get  employment  without 
one.  This  card  therefore  becomes  a  license  to  work. 
Before  being  able  to  draw  any  sick  benefits,  he  must  pay 
twenty-six  weeks'  dues  at  six  cents  (for  a  woman  it  is 

♦  For  proposed  increases  In  the  benefits,  see  supra,  pp.  17-18. 


65 

four  cents)  a  week,  and  if  these  dues  are  not  paid  regu- 
larly the  amount  of  the  relief  is  reduced.  He  can  draw 
only  twenty-six  weekly  sick  payments  per  year.  He  is 
not  free  to  employ  any  doctor  he  wishes  but  must  select 
one  from  a  list  (the  ** panel")  approved  by  government 
authorities.  His  medical  treatment  comprises  only  the 
simplest  of  remedies  for  the  sick  and  the  scantiest  of  sup- 
plies for  the  disabled. 

To  qualify  for  the  old-age  pension,  an  applicant  must 
not  have  an  income  from  all  sources  sufficient  to  make 
up  with  the  ten  (until  recently  five)  shillings  pension 
more  than  twenty  (until  recently  thirteen)  shillings  a 
week.  In  certain  British  trade  unions,  in  order  to  make 
the  union  superannuation  benefit  and  the  government 
old-age  pension  together  amount  to  no  more  than  the  thir- 
teen shillings,  the  union  payments  have  been  reduced 
as  much  as  two  or  three  shillings  per  week.  When  the 
old-age  pension  went  into  effect  the  general  average  wage 
of  laboring  men  over  seventy  was  reduced  to  eight  shil- 
lings a  week,  which  permitted  drawing  all  the  five  shil- 
lings pension.  The  self-employed  at  small  gains  simi- 
larly gave  up  a  part  of  their  work  so  as  to  make  just 
sufficient  income  not  to  debar  themselves  from  the  full 
government  allowance.  Small  property  holders  trans- 
ferred their  titles  to  relatives  so  as  legally  to  draw  the 
five  shillings. 

To  qualify  for  unemployment  insurance,  the  British 
wage-worker  in  one  of  the  compulsorily  insured  trades 
must  carry  an  unemployment  insurance  card  besides  his 
health  insurance  card,  having  already,  when  a  member 
of  a  union,  his  union  card.  This  unemployment  insur- 
ance costs  the  workman  five  cents  a  week,  subtracted 
by  the  employer  from  his  wages.  To  qualify  for  benefit 
a  claimant  must  prove  that  he  has  paid  not  less  than  10 
full  weekly  contributions.  No  benefit  is  payable  for  the 
first  week  of  idleness.  Only  one  week's  benefit  can  be 
drawn  to  five  full  weekly  payments  of  dues.     No  more 


^P««S^P3««W« 


66 

than  15  weeks'  benefits  are  payable  in  any  consecutive 
twelve  months. 

It  should  be  noted  in  this  connection  that,  whereas 
the  German  sickness  insurance  system  is  elastic,  permit- 
ting groups  of  workmen,  with  the  consent  of  their  em- 
ployers, to  increase,  within  narrow  limitations,  the  rates 
of  contributions  and  cash  benefits,  the  British  system  is 
absolutely  rigid,  holding  the  benefits  in  all  societies  down 
to  the  common  low  level.  This  has  been  a  subject  for 
particular  complaint  since  the  recent  extraordinary  in- 
crease in  wages  and  cost  of  living. 

In  contrast  with  the  benefits  payable  under  these 
European  systems— and  the  two  analyzed  represent  the 
high  water  mark  in  Europe— note  the  benefits  insured 
in  some  of  our  American  trade  union  funds  and  fraternal 
benefit  societies.  The  European  insurance  may  be  bet- 
ter spread  out,  but  it  is  spread  out  remarkably  thin. 

Typical  examples  of  trade  union  sick  benefits  and 
pensions  in  the  United  States  will  serve  to  illustrate  both 
wage  levels  and  customary  wage  earners'  mutual  finan- 
cial assistance  in  this  country  as  compared  with  the 
figures  given  above  for  foreign  countries.*  The  Bakery 
and  Confectionery  Workers'  International  Union  of 
America,  having  13,916  contributing  members  to  the  sick- 
ness fund,  paid  in  1917  $59,969  on  account  of  sickness, 
at  the  rate  of  $7  per  week.  In  the  eight  years  and  seven 
months  from  January  1,  1909,  to  July  31,  1917,  a  total  of 
$306,830  was  paid  in  sick  benefits  at  an  average  monthly 
cost  per  member  of  36  cents.  Under  the  Locomotive 
Engineers'  Sick  Benefit  plan,  members  between  the  ages 
of  21  and  45  years  pay  90  cents  a  month  dues,  which  en- 
titles them  to  $10  a  week  for  26  weeks  and  $5  a  week  for 
an  additional  13  weeks.    The  dues  are  doubled  at  the  age 

♦Establishment  Funds  have  been  adopted  by  various  industrial  en- 
terprises, municipalities  and  railroads.  Generally  both  workers  and 
employers  contribute  to  the  benefit  insurance  funds,  but  in  the  main 
the  great  industrial  concerns  of  the  United  States  have  non-contributory 
pension  systems.— P.  T.  Sherman. 


67 


of  sixty  or  the  benefits  are  reduced  one-half.  In  this 
union  the  life  insurance  is  mostly  for  three  classifications 
for  members,  $1,500,  $3,000,  and  $4,500.  The  Indemnity 
Association  of  the  Order  of  Railway  Conductors  has  a 
scale  of  benefits  ranging  from  $30  a  month,  for  members 
aged  between  30  and  35  years  who  have  paid  dues  of  $1 
a  month  for  61  to  120  months,  to  $65  a  month  for  mem- 
bers aged  65  years,  paying  $4.50  a  month,  who  have  paid 
dues  for  over  480  months.  The  accident  insurance  of  the 
conductors  is  classified  according  to  grades  of  occupation, 
indemnity,  and  premium.  The  weekly  cash  benefit  during 
52  weeks'  disability  from  an  accident  is  $15  or  $25,  and 
for  the  loss  of  life  or  of  a  leg,  foot,  arm,  hand  or  eye  is 
$1,500  or  $2,500,  according  to  classification.  The  Typo- 
graphical Union,  65,203  members,  pays  an  old-age  and 
disability  pension  of  $6  a  week,  the  total  in  1916  amount- 
ing to  $337,330,  while  the  mortuary  benefits  were  $386,347 
and  the  '*home"  expenditures  $147,225.  In  these  three 
beneficial  features  the  union  expended  in  the  last  five 
years  nearly  four  million  dollars  ($3,888,474) .  The  union 
establishment  (**chapeP')  funds,  a  usual  feature  of  the 
trade  in  the  larger  cities,  pay  as  sick  benefits,  $8,  $10  and 
$12  a  week. 

The  choice,  therefore,  seems  to  be  between  holding  on 
to  the  American  high  level  voluntary  insurance,  trying 
to  spread  it,  or  abandoning  such  insurance  in  favor  of 
a  general  compulsory  plan,  leveled  down  to  suit  the  tail 
enders,  no  matter  what  the  cause  of  their  destitution 

may  be. 

J.  W.  Sullivan. 


i 


SOCIAL  INSURANCE  AND  THE  AMERICAN 

WAGE-WORKERS. 

In  recent  years  there  has  been  in  the  United  States 
something  of  a  movement— or  what  by  political  hot-house 
forcing  processes  has  taken  on  the  appearance  of  a  move- 
ment—to promote  compulsory  state  and  federal  social 
insurance.  Although  a  decade  has  elapsed  since  the 
spread  of  the  principle  from  the  old  Socialist  platform 
over  among  the  body  of  near  Socialists  who  are  inspiring 
the  movement,  no  state  has  yet  passed  any  social  insur- 
ance laws.  Official  response  to  agitation  for  the  purpose 
has  come  in  the  appointment  of  legislative  investigating 
commissions,  on  sickness  insurance  mostly,  in  the  prin- 
cipal industrial  states,  while  in  about  forty  of  the  states 
there  has  been  little  or  no  action  on  the  subject  by  the 
law-making  bodies. 

The  movement  has  usually  been  initiated  by  profes- 
sional uplift  or  radical  political  organizations  not  con- 
nected with  the  trade  unions,  although  the  masses  of  our 
wage-workers  look  to  the  latter  as  the  sole  authorized 
source  for  the  expression  of  a  systematically  ascertained 
agreement  in  labor  sentiment.  As  is  usual  with  zealous 
propagandists,  the  case  for  sickness  insurance  especially 
has  been  accompanied  by  insistent  claims  for  its  remark- 
able effectiveness  for  the  amelioration  of  the  lot  of  the 
workers  in  the  foreign  countries  in  which  it  has  been 
tried.  Labor  in  industrial  centers  now  hears  itself  ex- 
horted, not  to  pay  intelligent  attention  to  the  subject,  but 
to  pass  ready-to-hand  resolutions  demanding  the  passage 
of  a  theorists'  bill  providing  for  compulsory  sickness 
insurance.    Some  labor  organizations  have  complied. 

A  statement  to  the  wage-workers  of  the  facts  foremost 
in  the  development  and  general  discussion  of  the  question 
is  therefore  timely.     Those  facts  on  being  clearly  seen 


68 


69 


will  at  least  show  how  vitally  propositions  for  compul- 
sory insurance  must  affect  family  life  and  the  quality 
of  self-dependence  among  Americans. 

This  movement,  which  in  its  entirety  proposes  state 
systems  of  compulsory  sickness,  invalidity,  old  age  and 
unemployment  insurance,  applicable  exclusively  to  wage- 
workers,  it  will  hardly  be  denied,  links  up  in  the  minds  of 
the  generality  of  its  advocates  with  a  comprehensive 
theory  of  law-enforced  **  socialization. '*  On  the  assump- 
tion that  in  European  countries  among  the  results  of  com- 
pulsory sickness  insurance  previous  to  the  war  there  was 
an  abolition  of  much  of  the  extreme  poverty  of  the  work- 
ing-classes, those  advocates  see  established  an  essential  . 
part  of  the  foundation  for  the  new  social  order  contem- 
plated in  a  socialistic  program.  They  reiterate  the  argu- 
ment that,  especially  in  Germany  and  Great  Britain,  the 
situation  of  the  wage-workers  previous  to  1914  was  in 
important  respects  enviable  in  comparison  with  that  of 
Americans  in  similar  occupational  walks  of  life.  The  more 
prominent  among  the  proponents  of  social  insurance 
have  gone  so  far  as  to  endeavor  to  establish  as  a  statisti- 
cally grounded  fact  the  assertion  that  despite  trade  union 
effort  the  change  in  later  years  in  the  general  economic 
condition  of  the  American  workers  has  been  not  upward 
but  downward.  rThis  endeavor  is  at  once  an  indictment 
of  the  labor  movement  of  this  country  and  an  attempt 
to  substitute  for  its  form  and  policy  the  proposed  system 
of  European  state  Socialism,  or  one  of  its  variants,  an 
immediate  step  being  government  wage-workers '  sickness 
insuraiiceTX  American  readers  are  becoming  familiar  with 
comparisons  between  the  much  lauded  success  in  Europe 
in  this  respect  and  the  loudly  bewailed  trade  union  fail- 
ure in  America. 

To  the  grade  of  mind  which  accepts  Socialism  in  the 
bulk,  sickness  insurance  is  a  petty  detail  not  worth  much 
argument  or  even  investigation,  but  to  the  discrimi*nating 
mind  inclined  to  hold  fast  to  whatever  principles  have 


•(  ri 


70 

proved  sound  in  our  present  imperfect  system  of  society, 
state  sickness  insurance  becomes  the  more  important  the 
more  it  is  considered  in  its  proposed  details  of  adminis- 
tration, in  its  significant  designated  social  classifications 
and  in  both  its  immediate  and  remote  consequences  as 
affecting  not  only  the  workers  to  whom  it  is  to  be  applied 
but  the  nation  as  a  whole. 

To  the  American  Socialist,  the  sole  question  with  re- 
gard to  any  proposed  political  innovation  is  whether  it 
is  in  the  Socialist  platform.  If  it  is,  it  is  to  be  accepted 
and  argued  for.  But  to  the  rest  of  our  population,  the 
other  nineteen-twentieths  or  forty-nine  fiftieths,  any 
phase  of  a  proposed  radical  reconstitution  of  society  must 
stand  scrutiny.  The  proclamations  of  panacea  workers 
need  the  correctives  of  authoritative  data  and  a  discern- 
ing consideration.  Whether  this  review  of  the  subject 
is  characterized  by  these  features  is  left  to  the  decision 
of  the  reader. 

The  wage-working  masses,  the  independence  of  whose 
lives  is  to  be  intimately  affected  if  compulsory  social  in- 
surance comes  to  them,  are  invited  to  give  sober  thought 
to  the  facts  herewith  presented.  They  are  urged  to  get 
deep  into  their  minds  the  notable  features  of  compulsory 
sickness  insurance,  as  carried  out  especially  in  Germany 
and  Great  Britain,  and  the  social  conditions  giving  rise 
to  the  compulsory  character  of  the  insurance.  They  can 
then  make  some  estimate  of  whaj;  losses  as  well  as  bene- 
fits to  the  insured  the  enforcement  of  a  similar  principle 
in  its  necessary  details  would  bring  in  this  country.  They 
are  to  decide  as  American  citizens  fitted  to  be  their  own 
guardians  whether  it  would  not  be  wise  to  have  the  the- 
ory and  practice  of  all  systems  of  social — that  is,  work- 
ing-class— insurance  thoroughly  examined  and  thrashed 
out  in  patiently  sustained  general  investigation  and  dis- 
cussion before  accepting  any  feature  of  it  in  any  form. 


v>i/ 


71 

In  the  Ameeican  Federation  of  Labor 

The  leading  officials  of  the  American  Federation  of 
Labor  and  of  various  international  unions  and  brother- 
hoods, under  instruction  from  their  constituents,  have  in 
a  general  way  been  observing  for  years  the  development 
of  social  insurance  in  various  countries.  Consideration 
has  been  given  the  subject  at  Federation  conventions  and 
by  the  Executive  Council  and  special  committees  between 
conventions.  It  is  to  be  kept  in  mind  that  trade  union 
decisions  on  matters  of  national  bearing  are  made  at  the 
annual  conventions  of  the  American  Federation  of  La- 
bor, affiliation  with  the  Federation  by  the  four  inde- 
pendent brotherhoods  being  in  the  course  of  accomplish- 
ment and  association  of  these  two  wings  of  united  labor 
in  watching  legislation  having  long  been  a  fact. 

The  Federation  has  considered  resolutions  on  social 
insurance  at  most  of  its  conventions  since  1905.  The  pro- 
moters of  the  resolutions  have  usually  been  Socialists. 

In  1905,  at  Pittsburgh,  Victor  L.  Berger  moved  *Hhat 
the  Federation  indorse  the  general  principle  of  state  in- 
surance as  now  in  operation  in  Germany. ' '  A  substitute 
resolution  was  passed  which  merely  indorsed  **the  prin- 
ciple of  government  insurance  of  a  voluntary  nature. ' ' 

In  1906,  at  Minneapolis,  a  motion  by  Berger,  that  the 
convention  **  demand  that  some  plan  of  compulsory  life 
and  other  insurance  be  enacted,*'  was  defeated. 

In  1907,  at  Norfolk,  a  resolution  went  through  with- 
out debate  calling  for  ^^some  plan  of  compulsory  life  or 
other  insurance, '  *  to  be  *  *  enacted  either  by  the  state  or  by 
the  nation, '*  but  the  resolution,  having  no  specific  refer- 
ence to  social  insurance,  apparently  made  no  impression 
on  the  delegates,  and  nothing  came  of  it  except  a  little 
filip  to  Socialists'  propaganda  among  themselves. 

In  1910,  at  St.  Louis,  the  Committee  on  President's 
Report  recommended  **that  the  different  State  Federa- 
tions and  Central  Labor  Unions  and  the  membership  with- 


72 

in  the  various  states  put  forth  every  effort  to  secure  the 
enactment  of  such  legislation  relative  to  insurance  as 
may  be  necessary  to  prevent  the  interference  with  the 
rights  of  organized  labor  in  the  humane  work  in  which 
our  trade  unions  are  engaged. ' '  This  action  had  special 
reference  to  a  law  passed  in  one  of  the  Southern  states 
which  put  burdens  on  the  mutual  benefit  funds  of  the 
carpenters'  union. 

In  the  ** Report  of  the  Proceedings''  for  1910,  after  the 
table  giving  statistics  under  the  heading  of  ''Benefits 
Paid  to  Members  by  International  Organizations  During 
the  Past  Year,"  the  following  paragraph  was  printed: 

"Your  attention  is  called  to  the  fact  that  the  amounts  herein 
reported  as  having  been  expended  by  the  international  unions  on 
account  of  various  benefits  in  the  past  year  are  those  paid  directly 
by  the  Internationals,  and  therefore  the  totals  represent  but  a  small 
proportion  of  the  aggregate  sum  paid  by  trade  unions  in  the  way 
of  benefits.  A  number  of  international  unions  have  not  as  yet  es- 
tablished benefit  features,  and  others  pay  only  partial  benefits.  It 
must  be  borne  in  mind  that  in  every  trade,  local  unions  have 
existed  independently  prior  to  the  formation  of  the  international 
union,  and  almost  without  exception  they  provide  death,  sick,  out 
of  work,  etc.,  benefits  for  their  members.  In  these  instances  bene- 
fit features  have  thus  become  Identified  and  recognized  as  belong- 
Ing  to  the  jurisdiction  of  a  local  union.  This  system  has  retarded 
international  unions  in  establishing  and  extending  benefit  features, 
for  the  reason  that  it  is  difficult  to  bring  locals  that  have  to  support 
their  own  benefit  funds  to  consent  to  increase  the  tax  to  such  an 
amount  as  would  enable  the  internationals  to  secure  the  means 
for  such  purpose.  In  most  instances,  benefits  paid  by  internationals 
are  supplemental  relief  paid  to  members  in  addition  to  the  benefits 
provided  by  their  local  unions." 

The  information  given  in  the  foregoing  paragraph  is 
much  overlooked  by  the  promoters  of  compulsory  sick- 
ness insurance  in  the  United  States.  Whereas,  for  ex- 
ample, the  death  benefits  of  the  international  unions,  as 
given  in  the  table  for  1919  ('^Proceedings"),  amount  to 
$5,122,399,  the  report  states  that  '*the  totals  represent 
but  a  small  proportion  of  the  aggregate  sum  paid  by  trade 
unions  in  the  way  of  benefits."  The  Typographical 
Union  is  represented  in  the  table  as  paying  in  benefits 
$355,931,  but  its  outlay  for  the  year  in  directions  not 
named  in  the  table,  including  old  age  benefits  and  the 
support  of  the  ''home,"  brought  the  total  up  to  $751,884. 


f 


73 

The  matter  of  tabular  presentation  of  the  voluntary 
social  insurance  results  in  the  American  labor  organiza- 
tions is  a  point  rarely  understood  by  European  statisti- 
cians. In  the  usual  comparative  national  statistical  tables 
on  this  subject  issued  in  Great  Britain,  Germany,  France, 
and  Italy,  the  United  States  is  quite  at  the  bottom  of  the 
list  in  trade  union  benefits.  On  many  occasions  Euro- 
pean labor  officials  and  statisticians  have  asked  Ameri- 
cans about  this  country's  apparent  backwardness  in  this 
respect.  The  reply  is,  it  is  a  case  of  the  facts  vs.  stating 
the  facts  in  print.  The  Socialist  Ph.  D.  upon  whom  the 
sickness  insurance  propagandists  largely  depend  for 
their  statistics  has  repeatedly  asserted  that  the  table  of 
the  American  Federation  of  Labor  report  shows  that  for 
the  international  unions  the  annual  social  insurance  re- 
ceipts were  often  only  slightly  more  than  $500,000.  Had 
he  known  enough  about  the  American  trade  union  move- 
ment to  qualify  himself  to  state  the  facts  of  the  matter, 
he  would  have  been  obliged  to  report  that  every  one  of 
the  big  unions  expends  more  than  that  sum  in  general 
benefits.  The  explanation  of  the  comparatively  small 
returns  in  the  American  Federation  of  Labor  tables  is 
two-fold :  First,  our  unions  make  no  special  point  in  get- 
ting up  general  statistical  statements,  their  few  officials 
being  otherwise  busy;  secondly,  as  already  stated,  the 
benefit  work  is  done  in  local  unions  rather  than  through 
the  internationals  and  the  local  unions  do  not  report  their 
benefits  to  the  international  unions.  These  methods  dif- 
fer from  those  of  the  European  labor  bodies,  whose  bene- 
fits are  usually  administered  from  national  organization 
centres,  to  which  the  local  unions  as  branches  regularly 
make  reports. 

In  1911,  the  President's  Report  urged  the  American 
Federation  of  Labor  membership  "to  secure  the  enact- 
ment of  such  legislation  as  would  prevent  permanently 
any  interference  with  the  right  of  organized  labor  to  care 
for  the  sick  and  other  disabled  people. ' '    The  Committee 


^ 


74 

on  President's  Report  approved  of  this  recommenda- 
tion, and  no  resolution  on  state  sickness  insurance  came 
before  the  convention. 

In  1913,  at  Seattle,  resolutions  directed  the  executive 
committee  to  make  the  subject  of  social  insurance  a  mat- 
ter of  serious  inquiry.  A  resolution  was  passed  declar- 
ing that  the  trade  unionists,  **as  heretofore,  are  now  in 
favor  of  all  national  and  international  unions  paying 
strike,  unemployment,  old  age,  partial  disability,  death 
and  other  benefits.''  The  matter  was  referred  to  the 
Committee  on  Education. 

In  1914,  at  Philadelphia,  the  convention  approved  of 
the  Executive  Council's  suggestion  that  **a  serious  study 
be  made  of  the  proposition  for  the  American  Federation 
of  Labor  to  establish  an  insurance  department,  which 
would  be  voluntary  and  which  would  be  inaugurated  with 
straight  life  and  then  extended  to  other  forms  of  benefits 
as  experience  should  warrant." 

The  Executive  Council's  report  of  1914  contained  a 
tabulated  statement  of  certain  existing  trade  union 
phases  of  insurance.  In  the  intervening  twelvemonth 
information  had  been  gathered  regarding  benefits  in  va- 
rious forms  paid  in  many  of  the  international  and  local 
unions,  much  of  the  statement  of  facts,  however,  not  being 
interpretable  through  tabulation.  Evidence  was  given 
of  mutual  benefit  work  beyond  estimate  performed  by 
American  trade  unionists  locally  without  systematic  rec- 
ord— in  unionized  establishment  societies,  in  free  neigh- 
borhood assistance  and  especially  in  work  sharing.  Cus- 
tomary help  of  this  character,  taken  for  granted,  goes 
without  record ;  it  cannot  be  set  forth  in  statistics.  In- 
ternational unions,  it  was  again  testified,  in  many  cases 
pay  benefits  from  headquarters  without  any  supervision 
of,  or  connection  with,  local  unions,  while  the  reverse  is 
frequently  the  practice,  international  officials  not  getting 
reports  of  local  methods;  and  local  and  international 
unions  in  a  single  occupation  often  give  dual  benefits 
independently. 


75 


J 


Strike  payments,  in  the  mind  of  the  American  trade 
unionist,  lead  in  importance.  Strikes  serve  to  win  the 
rightful  substitutes — higher  pay,  especially — for  benefits 
from  union  or  state.  The  American  Federation  of  La- 
bor's first  practical  object,  pursued  aggressively,  has  been 
to  raise  wages  and  shorten  the  workday  through  the 
workers'  control  of  their  own  labor  power  collectively. 
The  strength  of  the  Federation  unions  carries  them  be- 
yond the  line  of  merely  administering  benefits  and  resist- 
ing the  attacks  on  wage  rates  by  employers,  so  often  the 
status  of  labor  organizations  in  Europe.  The  latter,  when 
not  purely  political  bodies,  being  commonly  in  their  ori- 
gin mutual  aid  societies,  use  their  benefit  statistics  as  a 
form  of  advertisement  in  drumming  up  new  members. 

The  Executive  Council's  report  in  1914  stated,  with 
regard  to  the  insurance  laws  of  other  countries,  that  it 
**  should  be  given  more  time  in  which  to  continue  its 
labors  pertaining  thereto."  The  scope  of  the  investiga- 
tion should  be  both  extensive  and  intensive.  *  *  However, '  * 
was  added,  *  ^  the  attention  of  workers  should  be  called  to 
a  condition  dangerous  to  their  welfare  which  has  devel- 
oped out  of  social  insurance  and  welfare  provisions — the 
requirement  of  physical  examination  of  workers  as  a  con- 
dition requisite  for  employment  or  continuous  employ- 
ment." The  Executive  Council  further  said  it  had  de- 
cided to  await  the  delivery  of  the  large  amount  of  testi- 
mony on  both  problem  and  experience  to  be  given  at  the 
International  Congress  on  Social  Insurance  to  be  held  in 
Washington  in  September,  1915.  But  that  proposed  con- 
gress was  prevented  by  the  war.  This  1914  Executive 
Council  report  indicated,  in  extent  and  content,  the  sev- 
eral efforts  made,  both  in  convention  and  council,  by  the 
representatives  of  the  trade  union  movement,  duly  to 
consider  this  subject  and  especially  to  note  its  conse- 
quences upon  the  organization  and  liberty  of  the  Ameri- 
can wage-workers. 

The  dominant  thought  in  the  trade  union  movement  in 
regard  to  insurance  of  any  form  is  self-dependence  for 


76 

the  workers  singly  or  in  association.  At  the  convention 
m  1914  these  guiding  principles,  formulated  by  the  Ex- 
ecutive Council,  were  adopted : 

Hn^J'.Sr  M  ]?''^^  'i°*°''  °^  ^"^  international  the  initiation  fees  and 
h^^h  pnn?,l^?  ""^'i^r'  ^^^  initiation  fee  should  be  low.  the  dues 
aid  to  Pr^f ?o  ^"^  ^""^^^  T^  "'"^^  obligation  of  the  organization 
and  to  create  a  reserve  fund  to  meet  trade  emergencies  as  well  as 

?heTshoulT  bf  hn^'"'  f  '^""^  ^^^  life  sST  epidemic's' 
nnion  wSL.  •  ^"^  ''^^  ^*™^  ^^^^^^^  ^"^^  in  the  international 
thi  ?;.«7^    f  circumstances  permit,  the  funds  should  be  held  by 

board  or  thP  ffn/^'^'^^H*  *^  '^"  °^  *^^  international  executive 
board,  or  the  funds,  under  proper  regulations  and  after  local  ex- 
penses  have  been  met,  should  be  sent  to  headquarters  of  interna- 
t  onals  for  safe  investment  in  the  name  of  thrinternatioia  In 
either  event  the  funds  should  be  in  amount  and  ravanaMmy  IS 
a  position  properly  to  support  the  contentions  of  the  membersh  S 
with  strike  or  lockout  pay,  as  well  as  to  provide  for  co^endable 
incidental  trade  union  benefits,  and  for  the  constructTvT?nterests 

Z  th^fo  m'^of '  h^P^m  ''  t^%-^---ation.  Thfsumrto'be  paid 
n!i^ofl^;T1?^^!^^^^^'  including  insurance,  should  be  well  cal- 
culated and  absolutely  within  the  means  of  the  organization  to  meet 

ml  Se  smalTwith  th''"''  '.^"^'^^  ^"^^^^^^^  payments  of  ben'e! 
ms  be  small,  with  the  opportunity  of  increasing  them  as  exneri. 
ence  shall  warrant,  than  to  place  them  at  so  hi^  a ^^re  as  tn 
make  meet  ng  obligations  impossible,  thus  destroying  noTonly  the 

Sn?zTtion3r'^^ip  '^1  T^f''^'  °^  ^^«  members  in  X  or 
•  ft  ?s  to  be\ifd  «i«n^  f  a  study  of  these  systems  is  recommended, 
.     11  is  to  be  said  also  that  international  unions  which  are  amone  the 

largest  and  most  stable  of  those  affiliated  in  our  FederatSn  maki 

^y'  fn'd'Th:  ,'r'^^^^T  ^^^^°"«   headings-'pensions  °^^^^^^ 
ftry     and  the  like.     Our  American  labor  movement  in  it^Plf  fnr 
nishes  models  for  the  study  and  imitation  TuS  e?^her  not  y^^^^ 
ttm^r/eloT'''"'"^"  °'  "^'  '^^^^^  ^"  ^^^  formrpoJsiW^  Hi 

In  asserting  that  trade  unions  afford  examples  of  suc- 
cessful sickness  insurance  the  Executive  Council  was 
strictly  within  the  sphere  of  incontrovertible  fact.    The 
sick  benefit  of  the  International  Cigarmakers  is  $5  per 
week,  with   the  total  ranging  about  $200,000  a  year. 
Death  and  disability  benefits  are  graduated.    In  the  In- 
ternational Holders'  Union  the  sick  benefit  fund  had  paid 
between  January,  1896,  and  October,  1919,  $3,509,460. 
Says  the  ''International  Holders'  Journal'':  ''At  no  time 
has  there  ever  arisen  a  question  as  to  the  honesty  with 
which  this  fund  has  been   supervised.    Whenever  the 
books  have  been  audited,  whenever  the  accounts  of  the  de- 
partment  have  been  examined  by  conventions,  it  was 
found  that  they  were  accurate  to  the  cent.    Every  penny 
paid  into  the  fund  had  been  expended  in  the  form  of  sick 


77 


benefits. ' '  The  Bakers '  International  Union  paid  in  sick 
benefits  for  the  year  ending  January  31,  1919,  $70,747. 
The  average  monthly  cost  was  39.5  cents  per  member,  the 
influenza  epidemic  having  increased  the  year's  sick  dues 
considerably.  The  "Bakers'  Journal,"  Harch  29,  1919, 
in  giving  the  statistics  of  its  sick  and  death  benefits,  said : 
"These  figures  demonstrate  beyond  a  question  of  doubt 
the  absolute  soundness  of  our  financial  system,  as  while 
the  benefit  funds  of  numerous  other  international  unions 
were  completely  depleted,  and  various  extra  assessments 
levied,  our  International  Union  was  able  to  meet  its  obli- 
gations without  the  necessity  of  any  additional  assess- 
ments and  still  maintain  their  reserve  funds  in  a  fairly 
sound  condition." 

In  1915,  at  the  San  Francisco  convention,  social  insur- 
ance was  necessarily  one  of  the  subjects  among  "unfin- 
ished business"  reported  by  the  Executive  Council  to  the 
delegates,  investigation  having  been  precluded  by  the 
war,  and  the  whole  matter  was  for  that  reason  post- 
poned. 

In  1916,  the  Executive  Council  reported:  "During 
the  past  year  there  has  been  persistent  agitation  in  favor 
of  compulsory  social  insurance  laws.  The  agitation  was 
originated  by  an  organization  that  is  neither  responsible 
to  the  wage-earners  nor  representative  of  their  .interests. 
That  organization  has  introduced  identical  bills  for  com- 
pulsory social  insurance  in  four  or  five  state  legislatures 
during  the  past  year."  The  measures  drawn  up  "were 
formulated  without  consultation  with  the  wage-earners 
and  introduced  in  legislatures  with  professional  repre- 
sentatives of  social  welfare  as  their  sponsors.  The  meas- 
ures themselves  and  the  people  who  prepared  them  rep- 
resent that  class  of  society  that  is  very  desirous  of  doing 
things  for  the  workers  and  establishing  institutions  for 
them  that  will  prevent  them  from  doing  things  for  them- 
selves and  maintaining  their  own  institutions." 


78 

The  convention  adopted  a  recommendation  by  the 
Executive  Council  **that  the  subject  of  social  insurance 
in  all  its  phases  be  given  greater  consideration  and  an 
extension  by  the  unions,  preferentially  by  the  national 
and  international  unions  as  well  as  by  the  local  unions, 
and,  in  any  event,  in  so  far  as  social  insurance  by  the 
state  and  national  governments  is  concerned,  if  estab- 
lished at  all,  it  should  be  voluntary  and  not  compulsory/' 
A  paper,  got  up  by  the  Socialist  group,  and  signed  by 
about  forty  of  the  400  to  500  members  of  the  convention, 
stated  the  wish  of  the  signers  to  be  recorded  as  voting  in 
the  negative  on  that  part  of  the  report  of  the  committee 
dealing  with  social  insurance. 

The  same  year  (1916)  a  joint  resolution  introduced 
in  the  Federal  House  of  Representatives  by  the  Socialist 
Congressman  Meyer  London  provided  **for  an  investiga- 
tion of  compulsory  social  insurance  and  unemployment, 
and  the  reporting  of  a  plan  to  Congress  whereby  com- 
pulsory social  insurance  could  be  established/'  This 
resolution  also  was  introduced  without  consultation  with 
the  responsible  representatives  of  the  wage-earners  of 
the  country  at  American  Federation  of  Labor  headquar- 
ters. It  was  opposed  by  organized  labor  and  not  acted 
upon  by  Congress. 

That  this  Meyer  London  resolution  deserves  a  place 
among  the  curiosities  of  proposed  socialist  legislation  will 
be  seen  from  the  following  excerpt : 

"That  it  shall  be  the  duty  of  the  commission  to  submit  and  to 
report  through  the  President  to  Congress  plans  and  recommenda- 
tions for  the  relief  of  unemployment  by  the  regularization  of  in- 
dustry, by  the  employment  of  labor  in  the  reclamation  of  arid 
lands,  reforestation,  the  exploitation  of  the  natural  resources  con- 
tained in  the  public  lands  of  the  United  States,  and  on  work  con- 
nected with  the  prevention  of  floods  and  inundations,  the  reclama- 
tion of  swamp  lands,  the  building  of  public  roads,  canals,  and  simi- 
lar public  undertakings,  and  by  the  establishment  of  industries 
which  are  to  be  maintained  by  the  government  of  the  United  States. 
The  commission  shall  report,  through  the  President,  to  Congress* 
Its  findings  and  recommendations  contemplated  to  be  made  by  this 
section  not  later  than  one  year  from  the  date  of  the  appointment 
of  this  commission." 


< 


I 


79 

The  **  American  Federationisf  of  May,  1916,  had  this 
editorial  paragraph  in  reference  to  the  London  propo- 
sition : 

"A  hearing  was  had  on  the  resolution  April  6.  At  this  hearing 
actuaries  and  men  and  women  interested  in  social  problems  from 
a  professional  standpoint  were  present  and  urged  the  adoption  of 
the  resolution.  These  persons  spoke  in  accord  with  what  evidently 
was  a  well  arranged  program,  each  dealing  with  a  particular  phase 
of  the  problem  to  which  the  witness  had  given  special  study.  It 
was  very  significant  that  the  list  of  speakers  contained  no  repre- 
sentative of  the  wage-earners.  On  April  11,  the  same  committee 
of  Congress,  that  on  Labor,  held  another  hearing  at  which  repre- 
sentatives of  organized  labor  appeared,  President  Gompers  leading." 

In  opening  his  remarks,  Mr.  Gompers  said : 

"Were  it  not  either  for  my  coming  upon  this  resolution  by  pure 
accident,  or  my  having  been  informed  through  the  alertness  of  the 
Legislative  Committee  of  the  American  Federation  of  Labor  that 
this  bill  was  introduced,  I  would  not  have  known  It  at  all." 

In  the  course  of  his  argument  Mr.  Gompers  cited  the 
trade  union  authority  for  the  views  he  expressed: 

"I  say  this,  too,  that  whenever  in  the  American  Federation  of 
Labor  there  has  come  up  for  determination  the  question  of  com- 
pulsory governmental  conditions,  whether  by  the  establishment  of 
the  hours  of  labor  by  law,  in  private  industry  or  in  any  other 
system  of  compulsion,  whether  in  arbitration  or  in  matters  of  this 
character,  the  view  that  I  have  expressed  here  has  prevailed.  I 
speak,  therefore,  by  the  authority  of  the  conventions  of  the  Ameri- 
can Federation  of  Labor,     ... 

"The  position  of  the  organized  labor  movement  is  not  based  upon 
misery  and  poverty,  but  upon  the  right  of  the  workers  to  a  larger 
and  a  constantly  growing  share  of  production,  and  they  will  work 
out  these  problems  for  themselves.  If  the  government,  by  aiding 
the  people,  can  contribute  and  will  contribute  toward  this  volun- 
tary movement  for  social  insurance  for  the  workers,  it  will  have 
done  nothing  to  place  an  obstacle  in  the  way  of  initiative  on  the 
part  of  the  toilers,  will  take  away  nothing  of  their  rights  and 
their  liberty,  and  the  workers  will  keep  within  themselves  the 
power  and  control  over  their  lives  and  their  work." 

While  neither  state  nor  national  laws  relating  to 
sickness  insurance  were  enacted  in  1916,  many  of  the  best 
known  spokesmen  for  organized  labor  declared  against 
hasty  legislation  on  the  subject.  In  a  special  article, 
*' Labor  vs.  Its  Barnacles,''  in  the  April  number  of  the 
** American  Federationist, ' '  Samuel  Gompers  said: 

"Compulsory  institutions  under  the  control  of  a  strong  central 
government,  following  a  definitely  organized  policy  and  making 
sustained  efforts  to  carry  out  plans  and  policies,  is  an  entirely  dif- 
ferent situation  from  compulsory  authority  to  regulate  in  the  hands 
of  constantly  changing  officials  under  a  decentralized  government." 


It 


80 

Mr.  Gompers  held  that  the  experience  in  Europe  with 
respect  to  health  insurance  ' '  ought  to  be  given  most  thor- 
ough consideration  before  a  compulsory  system  totally 
at  variance  with  our  national  institutions  and  national 
spirit  is  foisted  upon  the  workers  of  any  of 
states.  ... 


our 


Compulsory  sickness  insurance  for  workers  is  based  upon  the 
theory  that  they  are  unable  to  look  after  their  own  interests  and 
the  state  must  interpose  its  authority  and  wisdom  and  assume  the 
relation  of  parent  or  guardian.  There  is  something  in  the  very 
suggestion  of  this  relationship  and  this  policy  that  is  repugnant 
to  free-born  citizens.  Because  it  is  at  variance  with  our  concepts 
of  voluntary  institutions  and  freedom  for  individuals,  labor  ques- 
tions its  wisdom.    ...  '  H 

"This  one  thought  needs  to  be  emphasized.  The  so-called  Ameri- 
can Association  for  Labor  Legislation  has  formulated  the  bill  in 
question,  had  it  introduced  in  several  legislatures,  and  is  pressing 
every  energy  for  its  enactment.  And  yet  it  has  never  asked  or 
taken  into  consultation  any  official  body  of  labor  or  its  authorita- 
tive spokesmen  and  representatives.  That  association  has  evi- 
dently gone  on  the  theory  that  the  workers  of  America  are  still  in 
the  condition  where  they  must  be  led  by  some  'intellectual,'  that 
the  workers  have  neither  the  judgment  nor  the  will  to  protect 
fM^  r?J^^^  ^^®''"  ^'^i'.  ""^^^^^  ^^^  Interests,  and  that  therefore 
mters '  '^^^"°^      guardianship  must  be  exercised  by  would-be  'up- 

^ffZn^.J^^^^^"^''  proposed  in  New  York  and  other  states  calls 
attention  to  what  would  be  the  inevitable  consequences  of  adopting 
imil/?"''^-  K^^  ^^  evident  from  the  proposed  measure,  it  would 
build  up  a  bureaucracy  that  would  have  some  degree  of  control 
or  authority  over  all  of  the  workers  of  the  state.  It  is  in  the  na- 
ture of  government  that  when  even  a  slight  degree  of  power  is 

morlcomplefely  "  ''""'''''"'  °'  '^'  ^""^  '"^  ^"""'^^  "^^^  ^^  ^'^^^^^^ 

In  the  ' 'American  Federationist,''  January,  1917,  re- 
garding the  National  Conference  on  Social  Insurance  held 
in  Washington  the  previous  month,  Mr.  Gompers  in  an 
editorial  said : 

"It  was  evident  that  there  were  represented  two  diametrically 
w^'^?\r^"^'  ""^  thinkers,  those  who  were  looking  upon  the  S 
lems  of  the  wage-earners  from  the  outside  and  viewing  them  with 
sympathetic  concern  and  benevolent  thought,  and  those  wh^  were 
looking  upon  the  problems  of  wage-earners  through  the  elperilnce 
and  eyes  of  wage-earners.  The  one  group  wanted  to  do  someth?nl 
for  wage-earners  to  relieve  their  suffering  and  need  Th^  othe? 
group  wanted  to  do  something  for  itself,  to  solve  its  own  problems 
and  to  establish  itself  in  a  position  to  take  care  of  the  emer^enci^^ 
of  life.  After  all  had  presented  their  thoughts  and  cours?  of  act' on 
t  was  evident  that  the  consensus  of  opinion  was  in  favor  of  main 
taining  voluntary  institutions."  ^^^ 


\ 


\ 


81 

Eepresentative  speakers  for  the  organized  labor  move- 
ment of  America  at  this  conference  advised  caution  in 
moving  toward  government  health  insurance. 

John  P.  White,  then  President,  United  Mine  Workers, 
wrote : 

"The  fear  of  organized  labor,  and  lovers  of  human  freedom  gen- 
erally, is  that  low  wages  will  become  so  buttressed  by  remedial 
measures  of  this  sort  that  the  public  conscience  will  be  dulled  into 
an  acceptance  of  low  wages  as  a  permanent  institution." 

George  W.  Perkins,  President,  Cigar  Makers'  Inter- 
national Union,  said: 

"Without  going  into  the  question  of  compulsory  industrial  and 
social  insurance  by  the  state,  I  venture  the  opinion  that  society  at 
large  owes  the  unions,  which  pay  these  benefits,  a  debt  which  can 
be  wiped  out  only  by  subsidizing  the  unions,  through  regular  finan- 
cial contributions  computed  upon  a  fair  basis,  for  its  outlay  in  this 
direction.  It  cannot  be  successfully  denied  that  we  are  caring  for 
the  sick  and  the  unemployed  and  burying  the  dead,  and  that  in  so 
doing  we  are  in  a  measure  lifting  just  that  much  of  the  burden 
from  the  shoulders  of  society  at  large,  which  to  a  certain  extent 
is  the  beneficiary  of  our  activities  and  financial  outlay  without  con- 
tributing one  cent.  The  unions  are  not  insurance  companies.  They 
do  not  base  their  payments  upon  cold,  methodical,  actuarial  analy- 
ses, and  they  do  not  exist  for  profit." 

Grant  Hamilton,  of  the  Legislative  Committee,  Ameri- 
can Federation  of  Labor,  said : 

"Before  the  American  Federation  of  Labor  gives  its  approval  to 
any  plan  contemplating  the  establishment  by  law  of  any  form  of 
social  insurance  it  must  first  be  assured  that  the  economic  free- 
dom of  the  workers  is  guaranteed,  and  that  the  participation  in 
benefits  to  be  derived  from  any  system  of  this  character  is  not 
based  upon  continuous  employment  in  a  certain  industry  or  predi- 
cated upon  time  of  service  or  other  devices  intended  to  tie  the 
workers  to  their  jobs.  .  .  .  Regulation  by  statutory  law  is  the 
panacea  for  every  social  ill  by  welfare  groups  not  associated  with 
the  organized  labor  movement,  with  apparently  no  consideration 
of  the  ever-present  clash  of  the  legislative  and  judicial  branches 
of  the  government  whereby  the  rights  and  liberties  of  the  working 
people  might  be  jeopardized.  .  .  .  Sympathetic  advocates  of 
health  insurance  justify  the  plan  by  indicating  the  numbers  In- 
jured, incapacitated,  and  exhausted  by  modern  production.  Organ- 
ized labor  has  also  called  attention  to  the  number  of  debilitated 
and  physically  deteriorated  men  and  women  thrown  aside  as  use- 
less by  industrial  managements,  and  has  demanded  the  eradication 
of  the  inhuman  speeding-up  devices  that  have  wrecked  many  human 
lives.  Driving  workers  at  high  tension,  over  fatigue,  and  insani- 
tary conditions  of  work  are  fundamental  causes  in  ruining  the 
health  of  the  workers.  ...  For  the  prevention  of  disease 
there  is  no  agency  more  effective  than  high  wages— wages  that 
enable  the  workers  to  be  comfortably  housed,  well  nourished,  and 
free  from  the  harassing  dread  of  pauperism  and  dependency.  Major 
General  William  C.  Gorgas  bears  eloquent  testimony  to  the  effect 


i 


82 

of  high  wages  opon  health  and  disease  prevention.  He  has  said: 
'Our  increase  of  wages  tended  to  alleviate  this  poverty, 
and  I  am  satisfied  that  to  this  measure,  the  increase  of  wages, 
we  owe  the  greater  part  of  our  success  in  general  sanitation, 
outside  of  malaria  and  yellow  fever.  I  wish  this  great  sanitary 
measure— increase  of  wages— could  be  universally  adopted.  I 
am  aware  that  it  is  impossible  for  it  to  be  done  in  the  United 
btates  by  edict  of  government,  as  it  was  done  at  Panama,  but 

A  ?S  .®^®^3^  ^°"^^  ^®  ^^^®  ®^®^  "^or®  effectually  by  other  methods. 
Add  to  the  labor  man's  wage  from  $1.25  to  $2.50  a  day  and  you 
will  lengthen  the  average  American's  thread  of  life  by  thirteen 
years  at  least.' " 

In  1918,  at  the  American  Federation  of  Labor  conven- 
tion, St.  Paul,  Minn.,  the  six  delegates  of  the  International 
Ladies'  Garment  Workers'  Union,  Socialists,  proposed 
**a  comprehensive  national  system  of  social  insurance/' 
In  opposition,  several  Massachusetts  delegates  asked  for 
**an  immediate  investigation  of  the  subject  of  social 
health  insurance. ' '  They  called  attention  to  great  efforts 
'* during  the  past  few  years"  **to  obtain  the  approval  and 
support  of  organized  labor  to  a  scheme  for  social  health 
insurance  promoted  by  persons  and  organizations  who 
have  no  aflfiliation  with  the  labor  movement,"  and  re- 
ferred to  **the  intensive  and  costly  campaign  which  the 
promoters  of  this  scheme  have  carried  on  during  the  past 
two  years,  at  one  time  seeking  to  have  this  legislation 
adopted  in  twenty-eight  different  states.    Therefore  sus- 
picion has  been  aroused  that  this  scheme  was  supported 
and  promoted  by  those  who  for  years  have  sought  to 
disrupt  and  retard  the  cause  of  the  workers." 

In  approving  the  Massachusetts  resolution  in  pref- 
erence to  that  proposed  by  the  Socialists,  the  Committee 
on  Resolutions  said: 

"Your  committee  notes  that  the  Executive  Council  rightfully 
distinguishes  trade  and  occupational  diseases  from  general  illnesses 
not  attributable  to  employment  in  industry  and  commerce.  We 
believe  that  trade  and  occupational  diseases  should  be  considered 
in  law  as  well  as  in  fact  an  obligation  on  industry,  and  that  those 
who  contract  for  the  employment  of  the  workers  should  be  re- 
quirel  to  provide  compensations  to  those  suffering  by  health  im- 
pairment due  to  their  employment." 

The  Resolutions  Committee,  being  of  opinion  that  the 
Garment  Workers'  resolution  was  **at  variance  with  the 
investigation  which  should  necessarily  precede  a  definite 


83 

conclusion  or  program  on  this  subject,"  approved  of  the 
Massachusetts  proposal  that  a  special  committee  on  so- 
cial health  insurance  be  appointed,  a  course  which  the 
convention  adopted. 

In  1919,  the  special  committee — John  A.  Voll,  John 
J.  Manning,  Mrs.  Sara  Conboy,  Hugh  Frayne,  and  Collis 
Lovely — handed  in  its  conclusions  to  the  Executive  Coun- 
cil, reporting  that  many  sessions  had  been  held  in  mak- 
ing its  investigations.  The  council,  not  being  unanimous 
in  indorsing  the  report  in  all  its  findings,  and  desirous 
of  reaching  a  conclusion  which  should  receive  the  favor- 
able judgment  of  the  convention,  recommended  that  the 
entire  subject  matter  of  health  insurance  be  submitted 
to  further  investigation.  In  the  Federation  the  matter 
rests  at  that  stage.  The  reconstruction  program  of  the 
American  Federation  of  Labor  contains  no  recommenda- 
tion on  health  insurance.* 

*In  June,  1920,  the  Executive  Council  reported  to  the  Convention 
held  in  Montreal,  Canada,  as  follows: 

"The  Executive  Council  in  its  report  to  the  convention  of  the 
American  Federation  of  Labor,  held  in  June,  1918,  recommended 
the  appointment  of  a  special  committee  to  make  an  investigation 
into  the  subject  of  health  insurance,  particularly  as  it  applied  to 
industrial  and  occupational  diseases.  This  recommendation  was 
approved.  At  the  1919  convention  the  E.  C.  expressed  the  need  for 
further  investigation. 

"The  E.  C.  finds  itself  unable  to  reach  a  unanimous  agreement 
upon  the  subject  of  voluntary  health  insurance  and  trade  union 
health  insurance  on  the  one  hand  as  against  compulsory  state  or 
industrial  health  insurance  on  the  other.  Therefore,  because  of  our 
inability  to  agree  we  recommend  to  the  convention  that  the  entire 
subject-matter  be  referred  to  a  committee  to  be  selected  by  the 
E.  C;  that  the  personnel  of  that  committee  shall  represent  the 
proponents  and  opponents  of  compulsory  health  insurance;  that 
this  committee  shall  make  a  study  and  investigation  and  report 
to  the  E.  C.  at  the  earliest  possible  time,  and  that  the  report  of 
this  committee  as  made  to  the  E.  C.  be  submitted  to  the  1921  Con- 
vention of  the  A.  F.  of  L." 

The  recommendation  to  the  Convention  of  the  Committee  on  Execu- 
tive Council's  Report  follows: 

"In  the  Executive  Committee's  Report,  under  the  caption  'Health 
Insurance,'  the  Executive  Council  recommends  to  the  Convention 
that  the  entire  subject  matter  be  referred  to  a  committee  to  be  se- 
lected by  the  Executive  CouncU;  that  this  Committee  shall  make 
a  study  and  investigation  and  report  to  the  Executive  Council  at 
the  earliest  possible  time,  and  that  this  report  as  made  to  the  Ex- 
ecutive Council  be  submitted  to  the  1921  Convention  of  the  Ameri- 
can Federation  of  Labor. 

"Your  committee  concurs  in  these  recommendations. 

"The  report  of  the  committee  was  adopted." 


0" 


V 


i 


i 


84 

In  the  railroad  brotherhoods,  state  sickness  insurance 
has  been  regarded  with  indifference  or  has  encountered 
decided  opposition. 

Warren  S.  Stone,  Grand  Chief,  International  Broth- 
erhood of  Locomotive  Engineers,  has  frequently  given 
voice  to  the  opposition  of  that  organization  to  compul- 
sory health  insurance.    The  brotherhood  convention,  in 
May,  1918,  unanimously  adopted  the  report  of  a  commit- 
tee appointed  to  investigate  the  question.  The  committee, 
**  after  giving  all  the  correspondence  pertaining  to  this 
ease  due  consideration,"  recommended:  first,  "that  it 
does  not  approve  of  any  legislation  that  would  compel 
our  members  to  take  out  health  insurance'';  second,  ''that 
the  grand  body  go  on  record  as  opposing  any  state  legis- 
lation compelling  our  members  to  take  out  any  such  in- 
surance and  that  our  state  representatives  be  notified  to 
this  effect." 

Mr.  Stone  at  a  public  meeting  said : 

"The  trickery  of  the  group  of  social  reformers  who  are  attempt- 
ing to  foist  upon  labor  a  pernicious  system  of  compulsory  health 
insurance  was  evidenced  when  effort  was  made  to  convey  to  the 
public  the  impression  that  Mr.  Samuel  Gompers  had  changed  his 
position.    This  was  done  during  his  absence  in  Europe  where  he 
was  rendering  patriotic  service  last  August.     They  revamped  an 
address  of  Mr.  Gompers  published  in  the  'Official  Bulletin'  of  the 
Committee  on  Public  Information  and  issued  it  as  a  press  state- 
ment of  their  own  organization.     This  'made  over'  speech,  origi- 
nally addressed  officially  to  members  of  the  Committee  on  Labor, 
Advisory  Commission,  Council  of  National  Defense,  contained  the 
inserted  deduction  that  this  was  regarded  as  the  opening  way  for 
the  early  adoption  of  social  health  insurance;    (again  no  mention 
of  'compulsory,'  which  that  organization,  the  American  Associa- 
tion for  Labor  Legislation,  advocates).    This  was  quite  evidently  a 
sinister,  deliberate  effort  to  mislead.     Fortunately,  a  good  trade 
unionist   was   at  hand   to   protect  the   position   of  Mr.   Gompers 
His  assistant  in  the  Committee  on  Labor,  Mr.  Matthew  Woll,  Presi- 
dent of  the  International  Photo-Engravers'  Union,  promptly'  issued 
a  denial." 

At  another  meeting  Mr.  Stone  said: 

"I  am  opposed  to  the  paternal  idea  of  government.  I  do  not  be- 
lieve in  a  form  of  government  that  does  everything  for  the  indi- 
vidual except  tuck  him  into  bed  at  night.  My  reasons  for  object- 
ing to  governmental  control  or  the  placing  in  their  hands  of  con- 
trol over  wage-earners  are  many,  among  others:  governmental 
power  grows  by  what  it  feeds  on.  Give  an  agency  any  political 
power  and  it  at  once  tries  to  reach  out  after  more,  its  effectiveness 
depending  on  increasing  power.    This  has  been  demonstrated  time 


85 


J 


and  again.  The  first  thing  to  do,  in  order  to  establish  social  insur- 
ance, is  to  divide  workers  into  two  groups,  those  eligible  for  bene- 
fits and  those  considered  capable  to  care  for  themselves  according 
to  their  wage-earning  capacity.  This  governmental  regulation 
would  tend  to  fix  the  citizens  into  classes,  and  if  the  system  pre- 
vailed for  any  length  of  time  would  establish  class  distinctions 
difficult,  if  not  impossible,  to  overcome.  .  .  .  Each  year,  more 
and  more  of  our  citizens  are  coming  to  believe  in  the  theory  of 
drugless  healing.  These  and  Christian  Scientists  and  members 
of  the  New  Thought  church  would  have  their  religious  liberty  in- 
terfered with,  because  it  would  force  medical  examination  and 
medical  treatment  upon  them.  It  would  destroy  the  very  founda- 
tion of  our  principle  of  government — the  spirit  of  independence. 

•  •  • 

"Is  it  [sickness  insurance]  to  be  fed  to  the  laboring  men  and 
women,  whether  they  want  it  or  not?  It  would  appear  so.  Take 
the  Brotherhood  of  Locomotive  Engineers,  and  the  others  are  along 
the  same  lines.  We  have  147  millions  of  dollars  of  insurance  in 
effect  today.  We  have  paid  out  over  forty  millions  in  the  homes 
of  deceased  and  disabled  members.  We  have  an  indigent  fund  and 
a  pension  fund,  whereby  men  can  take  care  of  themselves.  We  are 
paying  out  over  three  million  dollars  a  year.  We  have  not  a  single 
member  of  the  organization  who  is  a  public  charge,  and  yet  we 
are  going  to  have  this  form  of  health  insurance  forced  upon  us 
whether  we  want  it  or  not.  And  ours  is  only  one  of  the  many 
labor  organizations  working  along  the  same  line." 

Two  years  ago,  in  February,  1918,  a  conference  of  the 
New  York  State  Federation  of  Labor,  about  200  delegates 
present,  indorsed  a  health  insurance  bill  brought  to  it  by 
its  Committee  on  Health  and  its  Executive  Council.  A 
delegation  from  the  group  of  non- wage-workers  which  is 
most  prominent  in  promoting  the  measure  throughout  the 
country  was  present,  its  spokesman  taking  a  leading  part 
in  the  proceedings.  The  State  Federation  has  officially 
since  stood  committed  to  compulsory  sickness  insur- 
ance. But  some  of  the  most  prominent  trade  unionists 
in  the  state  oppose  the  principle. 

Hugh   Frayne,    Chief   Organizer,    Eastern   District, 
American  Federation  of  Labor,  has  made  these  charges : 

"Those  who  are  promoting  the  compulsory  legislation,  we  are 
informed,  imide  application  for  positions  when  the  law  went  into 
operation,  they  assuming  that  it  was  going  to  become  a  law.  We 
have  good  reason  to  believe,  judging  from  past  actions,  that  those 
promoting  these  laws  creating  guardianships  for  labor,  are  doing 
so  primarily  to  create  positions  and  then  establishing  high  exami- 
nations under  civil  service  so  that  no  one  excepting  those  who 
have  a  college  education  can  take  them.  Labor  cannot  be  rep- 
resented because  the  qualification  by  the  civil  examination  is  too 
high.    We  have  experienced  that  in  the  past. 

"I  want  to  say  that  we  protest  against  compulsory  social  insur- 
ance and  more  so  when  any  men  set  themselves  up  to  create  such 
measures  without  even  taking  the  trouble  to  consult  us  regarding 
the  same." 


i 


i 


I 


86 

Peter  J.  Brady,  President  New  York  State  Allied 
Printing  Trades  Council,  has  said : 

"In  the  public  schools— I  guess  It  is  the  best  place  to  put  them— 
there  should  be  clinics  for  the  periodical  examination  of  school 
children,  both  as  to  their  health  and  for  dentistry.  Anybody  that 
keeps  up  with  the  papers  today  can  find  where  the  social  workers 
nllr^J''^''^''^^'  ^^,.^^eir  neighborhoods  or  in  their  districts,  some 
charitable  proposition,  whether  in  the  neighborhood  settlement, 
or  possibly  in  the  basement  of  the  school,  a  proposition  to  secure 
money  for  the  equipment  of  a  clinic  for  these  very  things— appeal- 
Jm,,!^!,  f  wage-earners  thus  on  a  charitable  proposition,  some- 
wi  i.^f  7^%^*''''''o^°'"®^^^^^  ^^^t  ^®  object  to,  and  something 

7i.JvV^  'nfi^  ^-^i-  J""  ^^^^  ^  '^^  ^^  y°"'  a°<i  to  the  people  behind 
this  kind  of  legislation,  that  if  they  are  so  anxious  to  take  care 

L  h^f  ,^^?^^ar^er  who  is  not  able  to  take  care  of  himself,  start 
JL^^  ^.K ''^  i'^r^  ^^.  ^\^  "^^'^^^^^^  and,  in  addition  to  providing 
^i.^7i*^w®f^^''^  facilities  for  the  proper  development  of  theif 
minds  so  that  they  will  know  how  to  take  care  of  themselves  and 
take  their  place  in  society  later  on,  also  take  care  of  their  health." 

Timothy  Healy,  International  President,  Stationary 
Firemen 's  Union,  takes  this  stand : 

no3f  ^^^^^^  '"^  ^''"^  """^^"^^  to  t^^e  care  in  our  own  way  of  all 
ll^iL^''  are  unfortunate  and  need  our  attention.  We  have  had 
a  great  deal  of  experience  in  the  different  unions.  The 

JorThp''nn?/f?H'''''*;r"l  ^^""^^^  ^^t  behind  any  movement  ihat  is 
hours  ofT^W  I'^'h*^^  betterment  of  labor-higher  wages,  decent 
hours  of  labor,  and  good  sanitary  conditions.  Good  pay,  so  that  a 
man  can  support  himself  and  his  family  decently,  provide  good 
IZ't  c^uVt/C^^^^lithT^^  ^'  ^^^^'^^^  '^^  ^^«  fam^iyf  IsYheM^nl 

The  So-called  **Standakd  Bill''  and  State  Commissions 

Management  of  the  campaign  for  health  insurance 
centers  in  the  American  Association  for  Labor  Legisla- 
tion, which  has  no  standing  in  the  conventions  of  the 
American  Federation  of  Labor  or  of  the  Railroad  Broth- 
erhoods.   After  issuing,  in  November,  1915,  a  pamphlet, 
''Health  Insurance;  Standards  and  Tentative  Draft  of 
an  Act, ' '  it  caused  bills  drawn  up  in  accordance  with  the 
draft  to  be  introduced  in  the  legislatures  of  New  York, 
Massachusetts  and  New  Jersey.    By  this  so-called  '^  stan- 
dard bill"  wage-workers  earning  less  than  $100  per  month 
are  to  be  placed  under  compulsory  insurance  by  which  in 
cases  of  sickness  or  disability  from  accidents  not  covered 
by  workmen's  compensation  they  are  to  be  provided 
with — 


1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
10. 


87 

Cash  benefits  (2/3  wages). 

Medical  service. 

Surgical  and  nursing  attendance. 

Medical  and  surgical  supplies. 

Hospital  service. 

Cash  benefits  to  dependents. 

Funeral  benefits. 

Maternity  benefits. 

Dental  work. 

Medical  treatment  of  dependents. 


The  cost  is  to  be  divided  as  follows : 
40%  for  the  employer. 
40%  for  the  employee. 
20%  for  the  state. 

The  ' '  standard  bill ' '  or  an  adaptation  of  it  was  intro- 
duced, in  1917,  in  New  York,  Michigan,  California,  Mary- 
land, Oregon,  Pennsylvania,  New  Jersey,  Illinois,  Con- 
necticut, Wisconsin,  and  New  Hampshire,  and,  in  1918, 
in  New  York.    States  in  which  the  ''standard  bill"  or  a 
bill  having  somewhat  similar  provisions  was  introduced 
in  1919  were  New  York,  New  Jersey,  Ohio,  Kansas,  Mich- 
igan, and  Minnesota.    In  the  course  of  several  years,  bills 
to  appoint  commissions  to  study  the  subject  were  passed 
in  Connecticut,  Massachusetts,  New  Jersey,  Pennsylva- 
nia, Ohio,  Indiana,  Illinois,  Wisconsin,  and  California. 
Adverse  reports  followed  from  the  commissions  in  Con- 
necticut, Illinois  and  Wisconsin,  and  favorable  reports 
from  those  of  New  Jersey  and  California.    The  Ohio  com- 
mission reported  four  in  favor  and  three  opposed.    In 
Massachusetts,  the  first  commission  reported  favorably 
one  year  and  a  second  commission  adversely  another  year. 
The  Massachusetts  Constitutional  Convention  rejected 
the  project  as  presented  to  it.    California  had  two  com- 
missions and  the  Legislature  in  1917  passed  a  resolution 
for  submission  to  the  people  to  amend  its  constitution 
so  as  to  permit  compulsory  health  insurance. 


¥■ 


» 


88 

The  first  Massachusetts  commission's  inquiry  was 
into  the  desirability  of  sickness  insurance,  old-age  pen- 
sions, unemployment  and  hours  of  labor  in  continuous 
industries.  Conducted  hurriedly,  the  investigation  re- 
sulted in  an  admittedly  superficial  report.  A  minority  of 
four  of  nine  members  recommended  the  adoption  *  *  of  a 
general  system  of  health  insurance  for  wage-workers 
supported  by  enforced  contributions  from  employers  and 
the  state."  One  member,  while  concurring  in  this  rec- 
ommendation, dissented  as  to  the  distribution  of  the  cost 
until  more  accurate  information  should  be  available, 
**  based  on  Massachusetts  statistics. ' '  Two  members, 
though  sympathetic,  opposed  specific  legislation  *' until 
the  means  by  which  this  end  may  be  attained  are  thor- 
oughly understood  and  public  opinion  is  formed  on  the 
subject. ' '  The  remaining  two  members  counseled  against 
**inmiediate  legislation,''  contending  that  **this  commis- 
sion has  not  had  sufficient  time  to  study  the  subject  thor- 
oughly." 

The  second  Massachusetts  commission  continued  the 
study  of  health  insurance  begun  by  the  first  commission, 
going,  with  the  cooperation  of  bureaus  of  the  state  gov- 
ernment, more  intensively  into  social  conditions  in  the 
state.  Of  the  eleven  members  of  the  commission,  nine  re- 
ported adversely  to  compulsory  health  insurance — one, 
however,  with  the  qualification  that  final  judgment  should 
be  suspended.  A  minority  of  two  advocated  **  non-con- 
tributory" health  insurance  of  wage-workers. 

In  Massachusetts,  further,  the  proposition  to  amend 
the  constitution  to  permit  compulsory  social  insurance 
came  up  before  the  Constitutional  Convention,  July  30, 
1918,  and  after  an  entire  afternoon's  debate  was  uncon- 
ditionally rejected  by  a  vote  of  107  to  43. 

The  first  California  commission  reported  that  '*  health 
insurance  of  wage-earners  would  mean  a  tremendous  step 
forward  in  social  progress,"  but  that  they  were  not  ''pre- 
pared to  offer  a  plan  for  the  organization  of  the  meas- 


i 


\ 


i 


89 

ure,"  that  there  were  serious  objections  to  the  plan  of 
the  American  Association  for  Labor  Legislation,  and  that 
a  plan  of  organization  which  they  had  themselves  sketched 
out  might  ''be  open  to  objections  still  more  grave." 

The  second  California  commission  made  no  further 
investigation  or  inquiry  into  the  desirability  of  compul- 
sory health  insurance,  but  contented  itself  with  prepar- 
ing and  publishing  some  "standards  for  health  insur- 
ance," based  upon  a  long  distance  study  of  the  British 
National  Health  Insurance  in  the  rosy  light  of  official  re- 
ports, along  with  some  propagandist  material,  selected 
from  the  report  of  the  first  commission,  to  assist  the 
campaign  in  favor  of  the  adoption  of  the  proposed  amend- 
ment to  the  state  constitution,  then  pending,  to  permit 
compulsory  social  insurance.  One  member,  however,  rec- 
ommended an  "act  for  state  health  insurance,"  on  dif- 
ferent lines  from  those  laid  down  in  the  "standards'' 
adopted  by  the  majority.  The  proposed  amendment  to 
the  constitution  was  rejected  by  the  people,  November 
5,  1918,  by  a  vote  of  133,858  in  favor  of  the  amendment, 
to  358,324  opposed. 

The  New  Jersey  commission,  in  a  pamphlet  of  twenty 
pages,  reported  in  general  terms  very  unsatisfactory 
health  conditions  in  the  state's  industries  and  recom- 
mended compulsory  health  insurance.  Special  emphasis 
was  placed  upon  the  prevention  of  sickness,  the  opinion 
being  expressed,  without  accompanying  evidence,  "that 
health  insurance  is  a  measure  which  gives  great  promise 
both  of  relieving  economic  distress  due  to  sickness  and  of 
stimulating  preventive  action." 

The  Connecticut  commission  investigated  health  insur- 
ance, hours  of  labor,  minimum  wages,  old-age  pensions, 
mothers'  pensions  and  occupational  diseases,  going  into 
the  subject  of  health  insurance  only  far  enough  to  sat- 
isfy the  members  that  there  was  no  general  demand  for  it 
in  the  state.  The  commissioners  unanimously  reported 
in  favor  of  postponing  further  legislative  consideration 


J' 


90 

of  the  subject  ** until  the  changes  in  our  national,  state 
and  social  relations  resulting  from  the  war  have  been 
fully  adjusted. ' '  - 

The  Wisconsin  committee  studied  the  subject  of  com- 
pulsory health  insurance  with  some  degree  of  thorough- 
ness. It  found  need  for  improvements  in  the  public 
health  service  and  recommended  measures  for  that  pur- 
pose. Four  of  its  five  members  reported  that  there  is 
*'no  urgent,  well  defined  demand"  in  the  state  for  com- 
pulsory health  insurance,  and  *'no  outstanding  social  or 
economic  conditions  in  Wisconsin  at  this  time  which 
would  make  health  insurance,  as  a  compulsory  measure 
administered  by  governmental  authority,  either  neces- 
sary or  expedient.''    One  member,  however,— a  Socialist 

recommended    a    compulsory    health    insurance    law 

along  the  lines  of  a  pending  bill. 

The  Ohio  commission  investigated  the  subjects  of 
health  insurance  and  old-age  pensions  quite  extensively; 
but  its  data  were  collected  and  presented  in  its  report 
with  a  marked  bias  in  favor  of  compulsory  insurance. 
Of  the  seven  members  of  the  commission,  four  recom- 
mended compulsory  health  insurance  and  three  recorded 
themselves  as  opposed.  But  all  united  in  emphasizing 
and  giving  first  place  to  the  need  of  other  measures  for 
sickness  prevention. 

The  Pennsylvania  commission  investigated  the  sub- 
ject of  old-age  pensions.  Its  report  draws  a  very  depress- 
ing picture  of  economic  conditions  among  masses  of  the 
working  people  in  that  state ;  but  none  of  the  data  pre- 
sented was  relevant  to  the  subject  of  compulsory  sick- 
ness insurance,  save  upon  the  assumption  that  compul- 
sory sickness  insurance  is  a  cure  for  poverty.  The  com- 
mission recommended  no  immediate  legislation  but  rather 
that  the  problem  be  further  studied  and  investigated. 

The  Illinois  commission  investigated  the  subject  of 
health  insurance  most  thoroughly,  with  the  co-operation 
of  departments  of  the  state  government,  of  the  health  de- 


91 

partment  of  Chicago,  and  of  experts,  some  of  the  latter 
of  national  reputation.  Six  of  the  eight  acting  members 
of  the  commission  decided  that  its  findings  did  not  jus- 
tify it  in  recommending  compulsory  health  insurance. 
The  remaining  two  members  recommended  ^'universaP' 
compulsory  health  insurance.  The  650  pages  of  the  re- 
port of  the  Illinois  commission  contain  as  much  well 
sifted  matter  pertaining  to  the  subject  in  hand  as  any 
experienced  reader  of  reference  books  could  expect  to  find 
in  a  government  document.  The  committee 's  recommenda- 
tions relate  to  prevention  of  disease,  to  control  over  pub- 
lic health  administration  in  the  state,  and  to  the  appoint- 
ment of  commissions  to  study  the  problems  of  occupa- 
tional diseases  and  of  the  health  and  welfare  of  mothers 
and  infants.  Important  conclusions  were :  *  *  There  is  no 
inference  that  compulsory  insurance  has  resulted  in  an 
improvement  in  health."  .  .  .  **It  seems  clear  that  com- 
pulsory health  insurance  is  not  an  important  factor  in  the 
prevention  of  disease  or  in  the  conservation  of  health." 
.  .  .  **  Compensation  for  occupational  disease  should  be 
provided  by  the  employer  in  whose  employment  the  dis- 
ease is  incurred.  Occupational  disease  is  a  hazard  pe- 
culiar to  the  industry  concerned.  It  is  caused  by  that  in- 
dustry. With  non-occupational  diseases  the  case  is  dif- 
ferent." .  .  .  '*Ten  cents  per  day  will  provide  the  wage- 
earner  with  all  the  insurance  needed." 

In  most  of  the  states  neither  labor  nor  the  commu- 
nity in  general  has  shown  a  real  fighting  interest  in  the 
question  of  compulsory  sickness  insurance.  In  the  half 
dozen  states  where  it  has  come  up  for  public  discussion 
the  proposition  has  not  been  energetically  supported  by 
organized  labor.  It  usually  remains  a  subordinate  phase 
of  chronic  Socialist  fuss  and  fume.  No  law  providing  for 
the  system  has  yet  been  passed  in  any  state. 

In  California,  when  the  issue  was  up  for  discussion 

two  years  ago,  Daniel  C.  Murphy,  President  of  the  State 
Federation  of  Labor,  argued  strongly  against  the  prin- 


J1 
I 


I 


92 

ciple  of  compulsion,  while  giving  his  approval  to  the 
general  theory  of  social  insurance  on  a  voluntary  plan. 
James  W.  Mullen,  editor  of  the  ** Labor  Clarion,''  de- 
clared himself  as  strongly  opposed  to  compulsory  social 
insurance.  He  said  the  truth  as  to  European  experience 
was  that  **the  persons  who  most  need  insurance  of  this 
kind  will  be  absolutely  left  out  of  consideration  when  the 
scheme  is  put  into  operation.''  He  said  the  casual  la- 
borer out  of  work  would  be  unable  to  pay  his  contribu- 
tion and  therefore  would  not  be  entitled  to  benefits. 

Thomas  J.  Donnelly,  Secretary  Ohio  Federation  of 
Labor,  with  a  colleague,  0.  B.  Chapman,  as  members  of 
the  Ohio  Health  and  Old  Age  Insurance  Commission,  re- 
ported : 

"We  cannot  agree  that  the  state  should  at  this  time  enact  com- 
pulsory health  insurance  laws,  dividing  the  cost  of  such  insurance 
equally  between  the  employer  and  employee,  with  the  state  paying 
the  cost  of  administration.  We  do  not  believe  that  the  employees 
should  be  declared  indigents  or  wards  of  the  state  because  they 
should  have  been  the  victims  of  social  injustice,  and  because  of  the 
failure  of  the  state  to  perform  its  full  health  duty;  or  that  they 
should,  like  Esau,  be  confronted  with  the  proposition  to  sell  their 
birthright  for  temporary,  and,  under  the  proposed  health  insurance 
plan,  partial  relief.  This  birthright,  in  this  instance,  is  individual 
and  industrial  liberty.  .  .  .  Industrial  feudalism  and  super- 
visory government  are  the  two  greatest  dangers  to  American  free- 
dom, equality  and  the  development  of  character  and  responsibility 
of  the  individual.  It  is  our  firm  conviction  that  the  plan  of  health 
insurance  as  outlined  and  proposed  by  the  majority  members  of 
the  commission  contains  within  it  the  germ  of  industrial  feu- 
dalism, that  it  will  destroy  the  independence  of  the  workers  and 
retard  the  development  of  character  and  responsibility  by  the  Amer- 
ican wage-earner  and  naturalized  industrial  employees." 

It  should  be  noted  that,  although  the  movement  for 
compulsory  health  insurance  rests  largely  upon  contro- 
verted assertions  of  the  success  of  European  experiments 
in  that  form  of  social  insurance,  and  although  flatly  con- 
tradicted claims  of  the  results  of  such  European  experi- 
ments have  been  accepted  in  evidence  by  the  State  Com- 
missions and  Committees  whose  reports  are  before  the 
country,  yet  not  one  of  these  Commissions  and  Com- 
mittees has  investigated  results  abroad  to  learn  the 
truth  or  falsity  of  the  assertions  and  reports  criticized, 
nor  dwelt  upon  the  need  of  such  an  investigation.    But, 


93 

on  the  other  hand,  they  have  not  accepted  as  undisputed 
facts  the  assertions  regarding  European  experience  of 
the  formulators  and  supporters  of  ** standard  bills." 

New  York  has  been  the  field  of  the  greater  part  of  the 
contentious  discussion  of  compulsory  sickness  insurance. 
But  as  yet  the  state  has  had  no  commission  to  investigate 
the  question.  In  the  last  four  years  a  health  insurance 
bill  has  been  introduced  at  the  annual  sessions  of  the 
legislature,  each  bill  after  the  first  differing  in  important 
respects  from  those  preceding  it.  There  have  been  radi- 
cal changes  with  regard  to  the  occupations  to  be  included 
and  numerous  alterations  in  details  for  carrying  out  the 
scheme.  The  basis  of  the  Mills  bill  of  1916,  in  the  ab- 
sence of  the  findings  of  a  competent  commission,  was  the 
**  standard  bilP'  of  the  American  Association  for  Labor 
Legislation,  having  provisions  now  no  longer  asked  for 
by  the  association.  The  association  in  1915  and  1916 
published  three  successive  drafts  of  its  *  *  standard  bill, ' ' 
with  changes,  ** arising  from  suggestions,"  and  then  ac- 
cepted a  fourth  tentative  draft,  made  up  in  part  by  other 
agencies,  the  provisions  of  which  appeared  in  the  NicoU 
bill,  introduced  in  the  Legislature  in  1918.  In  1919,  fur- 
ther changes  came  with  the  introduction  and  amendments 
of  the  Davenport  bill  in  the  State  Senate.  A  reading  of 
these  successive  bills  brings  to  view  the  crudeness  of 
the  original  ** standard  bill,"  which  its  sponsors  were 
anxious  to  have  adopted,  the  imperfect  provisions  of 
which  would  now  have  been  law  had  the  bill  passed.  Ar- 
gument on  these  bills  has  necessarily  shifted  each  year 
as  new  phases  of  the  project  appeared.  Changes  in  the 
general  proposition  have  related  to  insurance  carriers, 
to  the  occupations  to  be  exempted,  to  the  estimate  of  cost, 
to  the  amounts  of  sick  payment,  to  the  cash  contribution 
by  the  state,  to  the  proportions  of  the  contribution  to  be 
paid  by  employer  and  employee,  and  to  the  methods  of 
administering  the  system. 


Jl 


94 

The  interested  citizen  who  reads  the  Mills  bills  of 
three  and  four  years  ago,  the  NicoU  bill,  and  the  Daven- 
port bill,  noting  the  progressive  variations  in  the  pro- 
visions proposed  by  their  advocates,  will  ask  if  it  is  by 
any  means  a  certainty  that  those  advocates  have  as  yet 
arrived  at  conclusions  clear  to  themselves,  whether  as  to 
principles  or  details  of  their  measure.  Whoever  reads 
these  bills  and  acquaints  himself  with  the  run  of  com- 
ment, political  or  otherwise,  on  them  and  their  purpose, 
must  speedily  see  that  sickness  insurance  takes  no  more 
than  a  subordinate  place  in  any  health  program  looking 
to  prevention  first  and  then  to  the  treatment  of  disease 
and  to  means  of  meeting  wage  losses  from  disease. 

The  state  may  rightly  undertake  measures  to  control 
the  treatment  of  the  sick  and  to  protect  all  its  citizens 
alike  against  the  various  menaces  to  health.  In  the  mat- 
ter of  meeting  wage  losses,  the  state  may  be  expected 
to  supervise  associations  for  the  purpose  and  to  supply 
the  machinery  for  such  supervision.  How  much  further 
should  it  go?  The  trade  unionist  stops  to  reflect  when 
in  theory  he  is  brought  to  the  line  which  sets  him  and  his 
fellow  wage-workers  apart  as  wards  of  the  state,  as  sub- 
jects of  special  taxation  and  as  material  for  a  social 
machinery  run  by  state  officials. 

What  may  be  the  weaknesses  in  a  law  introduced  **by 
request,'^  not  backed  by  the  conclusions  of  competent  and 
judicial  investigators,  is  shown  in  a  ** memorandum'' 
prepared  by  Dr.  Lee  K.  Frankel,  A.  Parker  Nevin,  Esq., 
and  Hugh  Frayne,  relating  to  the  bill  introduced  by  Sen- 
ator Ogden  L.  Mills,  January  15,  1917,  in  the  New  York 
State  Senate.  The  ** memorandum''  was  prepared  for 
legislators  to  show  the  weaknesses,  shortcomings  and 
dangers  in  the  proposed  legislation.    These  were: 


1. 
2. 
3. 


Inaccurate  definition  of  disability. 
The  presumption  that  compulsion  is  essential. 
The  scheme  of  insurance  neither  compulsory  nor 
voluntary,  but  a  mixture  of  both. 


95 

4.  Certain  groups  of  workmen  excluded  from  mem- 

bership. 

5.  Discrimination  against  voluntary  members. 

6.  Benefits  not  based  on  accurate  knowledge  of  cost. 

7.  Lack  of  uniformity  in  medical  and  surgical  care. 

8.  Failure  to  give  funds  necessary  autonomy  and 

power. 

9.  Malingering  not  controlled. 

10.  Difficulties  in  administration. 

11.  Fundamental  insurance  principles  ignored. 

12.  Distribution  of  cost  based  on  insufficient  data. 

13.  Cost  of  the  benefits  sure  to  be  in  excess  of  the 

provisions  of  the  bill. 

14.  Administrative  machinery  complicated  and  un- 

necessary. 

15.  No  supervision  by  the  Insurance  Department. 

16.  Prevention  of  disease  a  secondary  consideration. 

It  is  a  regrettable  fact  that  the  promoters  of  state 
sickness  insurance  have  pursued  their  purpose  with  a 
disregard  of  accuracy  in  placing  the  facts  of  the  case 
before  the  public.  Their  claims  have  been  far  too  large ; 
their  references  to  precedents  could  not  stand  examina- 
tion; their  hasty  anticipation  of  the  findings  of  an  un- 
biased commission  exhibits  the  weakness  of  unbusiness- 
like planning.  Bases  of  their  arguments  have  easily  been 
proven  unsafe.  For  example,  Senator  Davenport,  in  the 
New  York  Senate,  April  10,  1919,  said:  **It  was  the  re- 
sult of  the  study  of  an  English  Eoyal  Commission  of 
health  insurance  in  other  parts  of  Europe  that  led  Lloyd 
George  to  put  this  system  in  operation  in  England  in 
1911."  There  never  was  such  a  royal  commission  nor 
even  a  departmental  committee  nor  any  public  report 
or  opinion  from  medical  authorities  or  organizations  in 
Great  Britain  to  give  color  to  this  assertion.  **This  sys- 
tem," declared  Senator  Davenport,  *4s  used  all  over 
Europe."  In  this  assertion  there  was  *^a  world  of  un- 
truth," as  all  the  intellectuals  backing  the  bill  them- 


i 


i 


96 

selves  very  well  knew.  *  *  The  insurance  funds, ' '  said  Sen- 
ator Davenport,  **  would  be  run  entirely  by  the  workers 
and  employers  themselves. ' '  But  his  bill  provided  for  a 
state  commission  with  power  to  control  and  direct  the 
administration  of  the  insurance.  So  numerous  have  been 
the  misrepresentations  relating  to  the  development  and 
present  situation  of  health  insurance  in  foreign  coun- 
tries,* and  to  the  significance  of  the  provisions  and  even 
to  the  mechanism  planned  in  the  Davenport  and  other 
bills,  that  the  Committee  on  Constructive  Plan,  Social 
Insurance  Department,  The  National  Civic  Federation, 
in  October,  1919,  issued  a  **  Refutation  of  False  State- 
ments in  Propaganda  for  Compulsory  Health  Insurance." 
It  contained  scores  of  contradictions  and  corrections. 

The  Uncebtainty  of  the  Conditions  to  Rights  to 

Benefit 

In  studying  social  insurance  due  attention  and  weight 
should  be  given  to  the  conditions  upon  which  the  insured 
benefits  are  promised — in  other  words,  the  criteria  of  the 
right  to  benefits — and  to  their  adaptability  to  fair  and 
equal  application  in  practice.  In  life  insurance  the  cri- 
terion of  the  right  to  benefits  is  the  death  of  the  insured. 
Death  is  a  certain  fact  j  and,  except  in  rare  cases  of  dis- 
appearance, is  capable  of  absolute  and  undisputed  proof. 
In  old  age  insurance,  the  attainment  of  a  certain  age  is 
the  criterion  of  the  right  to  benefits;  and  in  countries 
where  complete  vital  records  are  kept  the  attainment  of 
such  age  is  seldom  a  matter  of  doubt  or  difficult  of  proof. 
But  the  criteria  of  the  right  to  benefits  under  invalidity 
and  sickness  insurance  are  wholly  different.  The  cri- 
terion in  invalidity  insurance  is  **  invalidity '* — sometimes 
called  **  disablement. ''  But  what  is  meant  by  **  invalid- 
ity"? ** Incapable  of  work."  Conceded;  but  incapable 
of  what  work?  Under  some  of  the  social  insurance  laws 
it  is  defined  to  mean  total  incapacity  to  pursue  any  gain- 
ful occupation.    In  others,  it  is  defined  to  mean  incapa- 


97    . 


city  to  earn  at  least  one-third  of  one^s  normal  wages  in 
any  suitable  occupation.  In  other  laws,  it  is  undefined 
and  left  open  as  a  subject  for  dispute  and  bitterness. 
And  what  is  the  evidence  of  incapacity?  The  man  of 
strong  will  may  continue  at  work  in  a  physical  condition 
wherein  others  would  give  up.  Who,  then,  is  to  decide! 
Or  is  there  to  be  a  double  standard,  one  for  those  who 
want  to  work  and  another  for  those  who  do  not? 

In  sickness  insurance  the  criterion  is  generally  inca- 
pacity through  sickness  to  work  at  one^s  usual  occupa- 
tion. This  is  the  most  uncertain  criterion  of  all,  so  un- 
certain as  to  be  incapable  of  fair  and  equal  application 
in  practice,  save  under  exceptional  conditions  and  among 
a  select  body  of  insured. 

What  is  sickness?  Who  is  sick?  Who  is  to  decide 
when  one  is  sick!  Who  is  to  say  when  one's  sickness 
is  his  own  fault?  Who  is  to  determine  justly  the  numer- 
ous questions  in  the  whole  matter  of  sickness?  To  what 
degree  is  sickness  in  many  cases  a  mere  state  of  mind? 
People  of  robust  mentality  ignore  the  common,  passing 
aches  and  pains  that  frighten  the  timid.  One's  habitual 
attitude  toward  sickness  counts  for  much.  Some  have 
the  doctoring  habit,  some  the  medicine  habit,  some  the 
habit  of  going  to  a  sickbed  for  the  slightest  ailments 
that  others  wear  away  by  work. 

Who  should  be  paid  for  being  sick?  There  are  regions 
in  this  country  in  which  a  relaxing  climate,  or  the  hook- 
worm, or  malaria,  continually  brings  the  underfed,  the 
aged,  the  careless  and  ignorant  so  close  to  the  sickness 
line  that  a  weekly  sick-pay  would  speedily  carry  many 
weak  brothers  over  to  a  series  of  short  illnesses  or  even 
to  permanent  invalidism.  There  are  in  all  parts  of  the 
country  the  incapable,  morally  or  mentally — granted,  a 
small  percentage  of  the  total — who  inevitably  fall  into 
the  classification  of  human  beings  who  must  be  helped. 
Under  any  form  of  sickness  insurance,  voluntary  or  com- 
pulsory, a  certain  proportion  of  the  members  of  any 


J 


p 


98 


99 


H 


group  anywhere  would  quickly  develop  the  habit,  to  be 
indulged  in  to  the  maxiijum  possible  degree,  of  being 
*'on  the  funds.''  In  every  hundred  wage-workers  some 
are  known  to  their  co-workers  as  sure  to  be  first,  last,  and, 
as  nearly  as  possible,  all  the  time  on  the  bounty  list. 
Should  it  be  a  sick  pay  list,  with  imperfect  regulative 
hindrances,  they  would  often  report  present.  In  every 
trade  requiring  men  of  hardy  physical  make-up  the  weak- 
lings, already  to  some  extent  a  burden  on  their  compan- 
ions, would  be  the  bad  risks  under  any  form  of  insurance. 

Among  men  and  women  whose  social  education  has 
been  obtained  in  this  country,  the  majority  would  surely 
today  avoid  taking  unearned  money  in  any  form.  That 
is  a  manifestation  of  the  American  spirit.  But  what 
would  be  the  consequences  in  this  respect  after  a  decader 
of  such  a  sickness  insurance  law  as  that  of  Great  Britain! 
Character  corrupting  habits  inevitably  spread  on  oppor- 
tunity and  temptation.  Would  not  the  bad  risks  turn  out 
to  be  bad  examples?  For  one  man  to  reject  what  another 
man  continually  takes  requires  the  stoicism  and  personal 
pride  of  a  strong  nature.  Expectations  of  help  from  the 
state  can  in  time  be  made  to  replace  a  good  citizen's  reso- 
lutions to  do  all  possible  for  himself.  But  the  trade 
union  principle  has  been  to  contend  for  individual  rights 
in  facing  employer  or  the  community  and  to  resent  un- 
justifiable interference  by  either. 

Statistics  as  to  the  percentage  of  the  wage-workers 
sick  and  of  the  average  number  of  days'  sickness  annu- 
ally are  necessarily  variable  from  several  causes.  Aside 
from  epidemics  and  accidents  or  war  there  enter  into 
the  enumeration  such  factors  as  climate,  race,  nationality, 
the  industries,  and  family  stock,  and  habits  and  modes  of 
life.  Under  sickness  insurance,  there  is  variance  accord- 
ing to  whether  the  cases  to  be  compensated  are  reckoned 
from  the  first  day  or  after  a  period  of  several  days '  wait- 
ing time  before  the  insurance  pay  begins.  When  the  pay 
ends  is  a  further  point;  the  insured  person  who  is  to  re- 


ceive  a  week's  sick  pay  on  Saturday  may  be  disinclined 
to  report  himself  well  on  Thursday.  A  permanent  and 
prominent  factor  in  the  background  is  signified  in  the 
ever  vexatious  questions  for  the  judges  as  to  who  is  ac- 
tually sick,  who  is  convalescent  and  who  is  fully  restored 
to  health. 

The  Federal  Commission  on  Industrial  Relations  in 
its  final  report  six  years  ago  made  the  statement  that 
"each  of  the  30,000,000  wage-earners  in  the  United 
States  loses  an  average  of  nine  days  a  year  in  sickness." 
Of  this  the  Illinois  Health  Insurance  Commission  re- 
porting May,  1919,  says:  "The  data  obtained  from  our 
various  investigations  warrant  the  conclusion  that  this 
is  only  a  slight  overstatement  of  the  average  time  lost." 
In  its  study  of  establishment  funds  the  Illinois  commis- 
sion found  that  in  three  of  the  largest  groups,  with 
134,274  members,  the  total  of  disability  after  a  waiting 
period  of  six  days  would  average  8.9  days  for  the  entire 
membership.  Thirty-three  smaller  funds,  with  66,854 
members,  the  waiting  period  being  seven  days,  gave  as  an 
average  5.1  days  lost  for  the  entire  membership.  The 
largest  number  of  wage-earners  thus  far  studied,  as 
reported  by  the  commission,  in  nine  comparable  benefit 
associations,  with  663,163  wage-earners,  the  waiting  per- 
iod being  8  or  more  working  days,  showed  an  average 
loss  of  6.54  working  days  each.  The  commission's  re- 
port says:  "While  these  data  indicate  something  of  the 
loss  due  to  sickness  and  non-industrial  accident,  they  are 
not  presented  and  cannot  be  accepted  as  an  accurate 
measure  of  disabling  illness  among  wage-earners  as  a 
whole."  .  .  .  "The  partial  evidence  available,  and 
it  cannot  be  regarded  as  entirely  representative,  indi- 
cates the  conclusion  that  about  twenty  per  cent,  will  be 
disabled  for  a  week  or  more  because  of  sickness  and  non- 
industrial  accidents  and  that  the  workmen  collectively 
will  lose  in  the  course  of  the  year  between  8  and  9  days 
because  of  such  disabilities." 


, 


i 


1'' 


100 

The  National  Conference  on  Industrial  Diseases,  held 
in  Chicago,  in  1910,  estimated  the  average  days  lost 
through  sickness  by  the  33,500,000  men,  women  and 
children  then  engaged  in  gainful  occupations  in  the  United 
States  at  eight  and  one-half  days  per  worker.  The  com- 
mission's report  adds:  **This  is  in  striking  agreement 
with  the  results  of  sickness  surveys  made  by  the  Metro- 
politan Life  Insurance  Company  among  policy  holders 
and  others  in  various  localities.  Seven  such  community 
surveys  have  been  made  by  the  company  in  widely  sepa- 
rated localities  which  included  a  large  variety  of  com- 
munity types.  *'  The  averages  reported  by  the  Metro- 
politan Life  Insurance  Company  were  8.5  days  for  men 
and  9.4  for  women.  The  Ohio  Health  and  Old  Age  In- 
surance Commission  repeated  the  formula  in  January, 
1919:  **  Available  statistics  show  that  every  worker  loses 
an  average  of  nine  days  annually."  The  first  Massa- 
chusetts Commission  estimated,  largely  on  assumed  data, 
that  the  number  of  days  lost  on  account  of  sickness  would 
be  8.5  per  person  per  annum.  The  California  State  Com- 
mission made  out  an  average  loss  of  working  time  in  the 
Bay  cities  of  the  State  in  certain  industries  as  only  2.9 
days  per  person  per  annum,  and  that  out  of  1,200  work- 
ingmen  whose  records  were  examined  one-fourth  of  the 
entire  amount  of  sickness  was  lost  by  ten  men.  So  runs 
variation  in  estimating  crowds  in  the  dark. 

The  testimony  from  European  countries  as  to  the 
average  loss  of  time  of  workingmen  per  annum  through 
sickness  varies  according  to  the  basis  of  calculation,  as 
well  as  for  other  reasons.  In  Austria,  the  time  **on  the 
cash  benefit"  averages  about  9.45  days  per  annum.  This 
percentage,  however,  includes  the  first  four  weeks  of  dis- 
ability from  industrial  accidents  and  excludes  much  time 
lost  from  chronic  ailments.  In  Germany,  * '  cash  benefits ' ' 
reached  an  average  of  8.66  days  a  year  per  capita,  includ- 
ing the  first  13  weeks  of  time  lost  from  compensatable 
accidents  and  also  time  in  hospitals  when  the  cash  benefits 


101 


are  cut  in  half.  Other  authorities  give  9.45  days  for 
Austria  and  9.2  days  for  Germany,  countries  having  com- 
pulsory sickness  insurance,  allowance  not  being  made  for 
factors  of  difference  in  computing  the  averages,  and  con- 
trast them  with  6.5  days  for  Boston,  Mass.,  and  7  days 
for  Kochester,  N.  Y.,  and  6  days  for  the  State  of  Califor- 
nia, populations  having  no  compulsory  sickness  insur- 
ance. 

However,  while  accepting  the  general  truth  as  lying 
somewhere  between  the  extremes  of  the  percentages  given 
for  different  countries  by  diverse  statisticians,  the  wage- 
worker  who  has  horse  sense  will  reconcile  himself  to 
certain  large  probabilities.  He  is  one  in  a  great  body 
of  human  beings  who  on  the  average  lose  from  three 
days'  work  upward  per  year.  He  takes  it  as  a  matter  of 
course  that  the  highest  figures  usually  represent  the 
feeble  and  incapable,  the  improvident  and  the  vicious,  the 
helpless  creatures  in  the  lowest  social  scale.  Every  trade 
union  has  its  laggards  in  the  procession  who  sooner  or 
later  fall  by  the  wayside. 

The  first  Massachusetts  Commission  estimated  the  an- 
nual cost  of  sickness  per  wage-worker  at  $25.70  per  per- 
son, the  basis  being  the  rates  of  the  fraternal  and  labor 
organizations  of  the  State.  In  New  York,  promoters  of 
compulsory  sickness  insurance  have  computed  the  annual 
loss  in  time  and  money  outlay  at  $75  for  each  wage- 
worker.  Accepting  these  estimates  for  what  they  may  be 
worth,  the  members  of  a  skilled  trade  union  can  calculate 
that  at  most  the  total  of  the  cash  benefits  from  compulsory 
sickness  insurance  to  those  who  should  fall  sick  would  be 
the  equivalent  of  a  raise  in  wages  amounting  to  a  very 
small  percentage.  It  might  be  three  per  cent  or  it  might 
be  five.  This  point  is  of  capital  importance  in  making  up 
one's  mind  whether  or  not  to  favor  state  sickness  insur- 
ance. By  the  *^ standard  bill"  the  first  three  days  of  a 
sickness  are  not  to  be  covered  by  the  insurance.  The  ex- 
penses of  that  **  waiting  period"  are  to  be  met  by  the  sick 
person  himself;  the  average  nine  days'  loss  hence  be- 


i 


M 


'■;' 


,  ( 


102 

comes,  roughly,  a  six  days'  concern  of  the  State.  But  the 
compensation  is  to  be  only  two-thirds  of  wages ;  the  nine 
days  of  sickness  thus  shrinks  to  four  days  of  compensa- 
tion. There  is  a  further  cut  on  these  four  days ;  the  dues 
of  the  insured  wage-workers  are  to  be  40  per  cent  of  the 
entire  amount  of  the  state  insurance  fund.  Thus,  the 
money  to  be  got  on  the  average  by  compulsory  insurance 
comes  down  to  less  than  3  days'  wages  of  the  insured ! 

The  rest  of  the  benefits  promised  in  the  compulsory 
sickness  insurance  bill  present  the  problems  of  the  proba- 
bilities of  fulfillment,  of  inquisitorial  intermeddling  with 
the  insured,  of  reconstituting  medical  practice  despite 
almost  united  opposition  by  medical  practitioners,  of 
placing  a  patient  in  the  position  of  an  applicant  for  state 
assistance  instead  of  being  a  free  cliert  judging  for  him- 
self and  making  a  contract  for  services  with  a  doctor  of 
his  own  choosing,  and  finally  of  converting  the  doctor  him- 
self into  a  functionary  of  a  bureaucracy. 

Besides :  Costs  to  the  state !  Rules  and  regulations  for 
everybody  insured?  Complicated  administrative  machin- 
ery? Malingering?  New  bewilderments  in  politics ?  The 
constant  clash  of  interests  involved?  Indiscriminate 
forced  classification  of  the  self-dependent  with  the  al- 
ways dependent?  Still  worse,  the  assumption  that  the 
American  wage-worker  is  a  weakling,  an  inferior  crea- 
ture who  needs  an  authoritative  protector,  a  childish  fel- 
low incapable  of  the  foresight  to  pilot  himself  through 
the  exigencies  of  life  and  lacking  the  manly  quality  of 
voluntarily  joining  with  his  fellows  in  craft  or  neighbor- 
hood organizations  whose  developments  have  shown  that 
they  can  surely,  satisfactorily  and  at  a  minimum  cost, 
do  all  and  more  than  all  that  the  State  can  reasonably 
promise? 

The  Principles  of  Trade  Union  Opposition 

Summarized,  the  principles  on  which  the  great  major- 
ity of  representative  trade  unionists,  not  only  in  labor 


\l 


V 


103 

conventions  but  at  the  meetings  of  local  unions,  oppose 
compulsory  sickness,  or  any  form  of  compulsory  insur- 
ance, are  these: 

Voluntary  social  insurance  coincides  with  democratic 
traditions ;  the  worker  should  have  free  choice  as  to  the 
form,  amount  and  methods  of  his  insurance.    The  funda- 
mental principle  upon  which  the  American  labor  move- 
ment is  established  is  voluntarism  in  all  its  activities.    No 
abridgment  of  the  free  exercise  of  the  right  of  the  wage- 
worker  to  look  after  his  own  affairs  should  be  permitted. 
Working  men  are  not  to  be  made  the  wards  of  any  other 
social  element  nor  of  all  o+^.ers  combined.     There  is  a 
distinct  line  of  demarcatioi   between  sicknesses  which 
arise  from  the  worker's  occupation  and  sicknesses  not 
attributable  to  his  occupation.     Compulsory  compensa- 
tion by  industry  for  occupational  diseases,  as  well  as  such 
compensation  for  occupational  accidents,  is  rightly  to  be 
considered  as  entirely  distinct  from  compulsory  insur- 
ance  of  sickness  disconnected  from  one's   occupation. 
Legal  compulsion  for  health  insurance  carries  with  it  the 
stigma  of  inability  on  the  part  of  the  insured  to  take  care 
of  themselves.    Compulsory  classification  of  the  workers 
as  dependents  on  the  State  is  a  form  of  pauperization.    It 
involves  a  surrender  of  rights  and  liberties  and  an  ac- 
ceptance of  paternalistic  benevolence  and  inquisitorial  in- 
terference in  the  management  of  the  family  life.    Depend- 
ence on  the  State  means  control  by  the  State,  the  tendency 
of  which  has  ever  been  to  reach  further  and  further  as 
against  the  individual.     Justification  for  a  plunge  into 
imitation  of  any  European  compulsor^^  sickness  insur- 
ance system  could  be  found  only  in  a  much  lower  depth 
of  poverty  than  that  existing  among  the  American  wage- 
working  masses.    There  is  no  established  proof  that  the 
European  methods  have  lowered  any  nation's  death-rate 
(and  inferentially  the  sickness  rate)  or  have  by  their 
benefits  satisfactorily  replaced  wage  losses  through  sick- 
ness.   The  many  American  voluntary  methods  of  insur- 
ance have  made  remarkable  progress  since  the  date  of  the 


i 


I' 


104 

conception  of  compulsory  insurance  in  Europe.  Civilized 
mankind  has  reached  a  new  era.  As  Mr.  Gompers  has 
said:  ** There  is  in  our  country  more  voluntary  sickness 
insurance  than  in  any  other  country  in  the  world.  We 
have  institutions  whereby  voluntary  insurance  can  and 
will  be  increased. ''  The  usual  rate  of  death  benefits  or 
old  age  pensions  or  weekly  sickness  allowances  in  Ameri- 
can trade  unions  amounts  to  double  or  treble  the  sums 
paid  either  by  European  governments  or  by  European 
working  men's  organizations.  A  score  of  American  in- 
ternational unions  have  within  their  own  organization 
methods  of  mutual  financial  self-help  for  which  the  state 
can  find  no  substitute  and  which  form  object  lessons  for 
imitation  in  other  voluntary  organizations.  It  may  be 
affirmed  that  the  consensus  of  opinion  among  American 
working  men,  organized  and  unorganized,  is  that,  as  to  the 
health  of  the  nation,  first  in  order  should  come  definite 
means  of  preventing  sickness  through  community  hygiene 
and  general  education  on  the  subject. 

Under  compulsory  insurance  the  terms  and  condi- 
tions are  decidedly  not  the  same  to  the  wage-worker  as 
those  when  he  insures  in  freedom  with  a  fraternal  or 
other  voluntary  organization.    Government  social  insur- 
ance registers  a  worker  as  a  ward  of  the  state.    It  obliges 
him  to  take  common  part  in  a  system  which  includes 
masses  of  other  working  people,  skilled  and  unskilled,  of 
every  degree  of  thrift  and  unthrift.    His  obligatory  card 
subjects  him  peculiarly  to  identification,  control,  inspec- 
tion, discipline  and  direction  by  government  authorities. 
He  has  a  number;  by  it  *^he  is  to  be  registered,  tabbed, 
checked  and  perhaps  judged.''    His  cards,  held  by  his 
employer  during  his  period  of  employment,  and  in  part 
stamped  at  his  expense,  emphasize  the  distinction  be- 
tween the  free  master  of  self  and  the  hired  man  held  in 
bondage.     The  employee  must  insure  for  the  flat,  un- 
changeable benefits  accorded  under  the  insurance  act  to 
all  the  insured  in  his  class.    He  cannot  drop  out  except 
by  becoming  permanently  unemployed.    He  has  entered 


'■ 


J' 


105 

on  new  relations  with  the  public  officials,  his  employer, 
his  benefit  society,  his  doctors,  and  the  less  thrifty  among 
the  working  people,  relations  all  dictated  to  him  by  the 
government.  The  social  insurance  laws  discriminate  be- 
tween him  and  people  of  larger  means  by  compelling  him 
to  submit  to  a  supervision  from  which  he  would  be  ex- 
empt had  he  a  little  more  money ;  and  in  Europe  they  have 
even  subjected  the  worker's  household  to  visits  of  inspec- 
tion and  regulation  not  dreamed  of  in  the  case  of  non- 
wage-workers.  The  employer  has  means  for  blacklisting 
the  employee  which  do  not  exist  when  the  latter  is  free 
to  insure  himself  voluntarily.  The  benefit  society  of  the 
employee  is  totally  changed  from  its  independent  char- 
acter when  it  becomes  a  mere  agency  for  the  administra- 
tion of  the  government  insurance.  The  employee's  doc- 
tor is  one  of  an  official  list  whose  incentive  for  faithful 
performance  of  duty  is  weakened  in  the  absence  of  emu- 
lation. The  panel  doctor's  remuneration  is  generally 
per  capita  regardless  of  the  quality  or  results  of  his  ser- 
vices; the  sickness  societies,  which  are  financially  inter- 
ested in  the  results,  would,  under  plans  here  proposed,  be 
deprived  of  their  liberty  to  interfere  for  their  own  or 
their  members '  protection. 

Under  compulsory  insurance  the  thrifty  trade  unionist 
is  under  duress  to  help  carry  the  weaker  members  among 
the  wage-workers  of  all  occupations ;  and  the  methods  to 
which  he  is  subject,  radically  different  from  the  recog- 
nized means  of  mutual  benevolent  assistance  in  American 
labor  organizations,  are  prescribed  by  rigid  law.  The 
wage-worker  accustomed  to  self-reliance  and  independ- 
ence finds  his  freedom  restricted  in  various  directions. 
This  point  has  thus  been  expressed:  **If  healthy,  sober, 
thrifty  and  a  skillful  artisan,  he  has  paid  a  high  price  in 
the  loss  of  various  personal  rights — of  the  right  to  be  free 
from  police  interference  when  selecting  his  own  methods 
of  thrift,  of  the  right  of  preventing  an  employer  from 
making  deductions  from  his  wages,  of  the  right  of  being 
in  a  sick  benefit  society  which  exercises  liberty  of  self- 


L 


|/ 


106 

management,  of  the  right  of  an  unrestricted  selection  of 
a  doctor,  and  of  the  undoubted  right  not  to  be  saddled 
with  an  unfair  share  in  the  support  of  the  mass  of  chroni- 
cally sick,  or  sham  sick,  or  self-deceived  as  to  sickness, 
and  other  such  known  burdens  of  society  in  the  helpless 
classes  who  would  be  forever  on  the  benefits." 

Great  expectations  have  been  held  out  to  the  American 
workingman  in  the  zealous  endeavor  to  induce  him  to  ac- 
cept compulsory  sickness  insurance.    But  those  who  have 
observed  the  actual  workings  of  European  experiments 
in  compulsory  insurance  know  that  such  expectations  can 
never  be  realized,  that  the  possible  advantages  of  it  for 
any  workingman   are   small — for  the   industrious   and 
thrifty  workman,  none  at  all, — whereas  the  price  to  be 
paid  is  heavy  and  certain.     The  American  workman  is 
studying  and  learning  the  facts.    He  wants  to  know  ex- 
actly what  those  proposed  ** reforms"  would  mean  for 
him  and  the  community.    He  does  not  want  to  be  misled 
by  glittering  generalities  and  false  promises,  to  his  in- 
evitable disappointment  and  bitter  discontent'.    He  has  a 
disturbing  sense  of  doubt  that  a  government  paternalism, 
suitable  to  the  type  of  immigrant  from  Austria  whom  he 
has  seen  arriving  in  this  country,  or  even  to  the  type  of 
British  inamigrant  coming  with  testimony  as  to  the  depri- 
vations and  low  wages  of  the  workers  in  the  land  that  he 
has  quit,  is  a  beneficial  substitute  for  the  principles  and 
privileges  of  American  citizenship  which  experience  has 
taught  all  our  people  to  appreciate.    The  wage-workers 
of  this  country  are  by  no  means  in  despair.    They  pro- 
pose to  advance  upward  by  exercising  their  rights,  by  con- 
tinually taking  all  the  wages  the  country's  production  jus- 
tifies, by  self-assertion,  self-protection,  self-determina- 
tion, through  group  or  individual  action,  as  called  for  by 
occasion.    The  American  wage-worker  is  no  suppliant  for 
favor,  from  boss  or  state.    Nor  is  he  an  inert  pawn,  to  be 
moved  at  will  by  the  superior  ** intellectual"  mind. 

J.  W.  Sullivan. 


.*«?X 


PROPORTIONS   OF   THE   INDIGENT   CLASS   IN 
THE  OLD  WORLD   AND  THE  NEW. 

What  are  the  comparative  levels  of  poverty  in  Ger- 
many and  Great  Britain?  What  are  the  differences  be- 
tween wages  in  those  countries  and  in  the  United  States! 

Are  the  ** proletariat"  of  Europe  and  the  wage- 
workers  of  the  United  States  on  the  same  economic  level? 
Is  their  general  condition  equally  barren  of  opportuni- 
ties ?  Can  it  be  said  with  truth  that  there  is  an  American 
proletariat?  Is  caste  known  in  the  United  States  as 
throughout  Europe  ?  What  would  the  answer  be  to  Marx 
could  he  today  proclaim  his  slogan  in  America,  **Work- 
ingmen,  you  have  nothing  to  lose  but  your  chains !"? 

The  wage-workers*  social  situation  in  America  has 
broad  features  of  difference  from  that  of  Europe.  In  this 
country  there  are  three  distinct  strata  in  the  wage-work- 
ing masses — the  American,  the  negro,  and  the  foreign. 
Each  stratum  has  its  subdivisions.  The  English  speaking 
immigrants  of  a  quarter  of  a  century  ago,  or  even  of  half 
that  period,  are  quite  Americanized.  A  fructifying  part 
of  their  intangible  capital  is  a  knowledge  of  American 
methods  and  institutions.  As  with  the  succeeding  years 
immigration  came  to  be  drawn  mainly  from  widening 
zones  in  Europe,  passing  from  the  Irish  on  the  west  to 
the  Russians  on  the  east,  so  have  the  newcomers  in  their 
order  progressively  learned  to  take  up  with  American 
life  and  to  share  in  the  country's  increasing  wealth.  A 
measure  of  a  foreign-born  workingman 's  wage-scale  is 
to  a  considerable  extent  his  years  in  America. 

The  initial  blunder  of  the  Socialists  and  of  the  *  *  intel- 
lectuals" who  seek  to  introduce  in  our  society  first-step 
planks  of  the  state  socialist  program  is  in  persistently 
looking  upon  the  wage-workers  of  America  as  a  mass  all 
equally  impoverished.  This  is  far  from  the  truth.  They 
must  grant  that  in  all  the  various  occupations  are  indi- 
viduals quite  distinct  as  to  nationality,  color,  skill  and 

107 


ik 


108 

physique.  Further,  if  observers  will  but  inquire  suffi- 
ciently to  get  at  the  facts  their  reward  will  be  a  percep- 
tion of  a  constant  change  going  on  in  the  social  situation 
not  only  of  individuals  but  also  of  families,  of  whole  in- 
dustrial groups,  even  of  the  body  of  the  descendants  of 
inunigrants  once  regarded  as  low  in  the  human  scale. 
They  will  see  what  were  only  the  faint  glimmerings  of 
potentialities  becoming  obvious  qualities  of  high  personal 
worth  and  positive  elements  of  national  value. 

Naturally,  native  born  Americans  are  the  majority 
in  the  more  highly  skilled  trades,  with  men  of  other  Eng- 
lish speaking  nations  often  their  equals,  or  nearly  so,  in 
wage  drawing  power.  Distinctions,  however,  are  devel- 
oped in  the  course  of  time  among  individuals,  irrespective 
of  racial  groups.  This  is  true  of  employees  in  every  es- 
tablishment in  the  land.  It  is  a  curious  but  persistent 
form  of  census  taker's  blindness  that  permits  social  work- 
ers and  college  library  formulators  of  economic  reports 
to  look  upon  wage-workers  as  merely  industrial  units 
having  approximately  equal  social  weight,  like  the  figures 
of  statistical  tables.  To  the  unsharpened  comprehension 
of  the  casual  non-working-class  visitor  to  a  great  factory 
all  the  workers  therein  are  simply  so  many  **  hands.  *'  It 
is  broadly  true  that  these  *' hands,''  in  overalls,  may  ap- 
parently be  but  attendants  at  parts  of  the  bewildering 
complexity  of  machinery,  and  they  may  look  alike  as  peas 
in  their  habits  and  grease-marks  of  toil  and  move  heavy- 
footed  in  the  performance  of  their  work.  No  doubt  thou- 
sands of  young  '* students  of  sociology,"  prompted  by  a 
passing  curiosity  or  cramming  for  a  degree,  every  year 
or  every  month  pass  through  factories,  printing  offices 
and  slaughter  houses,  to  carry  away  no  more  definite 
ideas  than  that  they  have  seen  roughly  dressed  and  pre- 
sumably uneducated  working  people  occupied  at  the  lower 
grades  of  production,  examples  of  a  stationary  caste,  far 
below  the  hierarchy  of  the  directorship.  These  surface 
observers  have  perceived  only  the  deceptive  seeming  uni- 
formity in  the  mass;  they  couldn't  see  the  trees  for  the 


I 


109 


woods.  But  the  American  man  or  woman  of  middle  age 
who  has  ever  been  a  wage-worker  can  look  back  through 
the  decades  and  see  standing  out  like  separate  species  of 
trees  the  remarkable  differentiation  which  time  has  wit- 
nessed in  any  force  of  workers  coming  within  their  ex- 
perience. As  trees  grow  according  to  their  nature,  their 
root  power,  and  their  soil,  so  men  in  general  may  grow; 
but  beyond  the  material  factors  of  growth  particular  men 
exhibit  to  an  extraordinary  degree  the  dominant  human 
factor  of  the  will  in  moving  upward.  Every  force  of  one 
hundred  wage-workers  of  twenty  years  ago  has  illustrated 
the  social  flexibility  of  this  country 's  labor,  the  contrasts 
in  the  ambitions  or  aptitudes  of  workingmen  and  the  high 
proportion  among  them  capable  of  seizing  means  for  ad- 
vancement. Whoever  has  become  intimate  with  factory 
life  knows  how  far  apart  the  various  employees  of  an  es- 
tablishment may  stand  in  industry,  social  habits,  aims, 
home  life,  and  in  taking  the  everyday  steps  that  result 
either  in  personal  failure  or  legitimate  success.  A  work- 
shop is  a  democracy  each  member  of  which  constantly 
makes  appraisal  of  every  other  member.  The  differences 
lie  not  so  much  in  nationality  or  book  instruction  or  phys- 
ical power  as  in  varieties  of  self-developed  character. 
Nature,  the  creative  democrat,  has  placed  among  the 
workers  every  human  quality.  Individuality  counts  ac- 
cording to  conditions.  As  to  many  conditions,  most  men 
make  their  own  beds. 

Fellow-workmen  hold  the  microscope  on  one  another. 
All  of  a  given  force  know  how  many  are  habitually  self- 
dependent  and  how  many  commonly  dependent  upon 
others ;  all  agree  that  some  among  the  number  border  on 
defectiveness  and  that  others  at  times  need  guardians. 
The  big  majority  are  normal  human  beings.  A  high  rep- 
utation comes  to  those  who  exercise  the  elements  of  pru- 
dence and  forethought  which  characterize  either  inherent 
or  acquired  wisdom.  Some  are  always  reckless  and  others 
ever  prudent,  whether  as  to  marriage  or  business  ven- 
tures or  self-indulgence.    Between  are  the  average.  Fore- 


t 


110 

man,  chairman,  and  the  man  at  the  bench  alike  know  which 
of  the  force  are  sending  their  children  to  school  the  extra 
two  or  three  years  in  the  early  'teens  that  count  so  much 
for  physical  and  mental  growth  and  the  placing  of  the 
child  in  after  life.    They  know  which  among  the  force 
are  content  to  live  in  slums  and  which  would  make  slums 
of  a  good  neighborhood.    **Slumites  make  the  slums.'' 
They  know  the  one  or  two  per  cent  who  are  the  irreclaim- 
able victims  of  drink  and  the  five  to  ten  per  cent  who  give 
way  to  drink  occasionally.    They  know  why  some  men 
would  be  foredoomed  to  fall  away  among  the  **  submerged 
tenth"  in  any  country  where  that  proportion  can  be  sub- 
merged.   They  know  that  while  ninety  per  cent  of  the 
workmen  in  America  desire  to  do  a  fair  day's  work  for 
a  fair  day's  pay  there  is  a  very  small  percentage  who 
have  the  lazy  pauper  spirit,  willing  even  to  accept  a  state 
reward  for  their  improvidence,  to  be  collected  mainly 
from  their  fellow  workmen.    Notoriously,  in  every  work- 
ing class  group  the  individuals  bound  to  come  up  regu- 
larly as  claimants  for  assistance  from  their  more  provi- 
dent fellows  are  known  to  all.    Deduction :  The  intimate 
knowledge  as  to  character  possible  in  the  small  social 
group  is  an  essential  factor  to  the  efficiency  of  any  sick- 
ness insurance  plan. 

No  social  element  is  stagnant  in  America.  The  stages 
of  working  class  progress  here  are  marked  in  the  changes 
of  population  in  certain  of  the  streets  of  every  factory 
town  in  New  England.  The  quarter  known  thirty  to 
forty  years  ago  as  ** Dublin"  is  now  ** Little  Italy."  What 
has  become  of  those  poor  greenhorn  Irish?  A  small  pro- 
portion passed  off  among  the  wreckage  of  populations. 
Many,  especially  the  children,  moved  upward,  financially 
and  otherwise.  In  the  west  are  old-established  mining 
towns  in  which  nearly  every  successful  business  or  pro- 
fessional man  sprang  from  a  father  who  was  a  working 
miner.  True  is  it  also  that  today  in  every  mining  town 
are  numerous  non-English  speaking  foreigners  who  in  the 
last  six  years  have  saved  more  money  than  was  accumu- 


111 

lated  in  the  course  of  generations  by  their  forefathers 
in  Europe.  It  would  be  interesting  to  know  how  much  of 
the  two  billion  dollars  now  in  the  savings  banks  of  the 
State  of  New  York  are  held  by  immigrants.  In  this  coun- 
try personal  thrift  still  takes  precedence  over  state  com- 
pulsion in  providing  against  individual  misfortune. 

It  is  pertinent  to  this  investigation  to  know  that  the 
last  United  States  census  report  gave  the  number  of  men 
over  twenty-one  years  of  age  as  17,000,000  native  and 
6,000,000  foreign  born.  In  the  six  industrial  states  in 
which  the  agitation  for  compulsory  sickness  insurance  has 
taken  some  hold — New  York,  Pennsylvania,  California, 
Illinois,  Massachusetts,  and  New  Jersey — nearly  40  per 
cent  were  foreign  born,  while  for  the  whole  country  only 
27  per  cent  were  foreign  born.  The  custom  of  looking  to 
the  paternal  state  for  protection — of  having  it  support 
even  the  church — inculcated  among  the  foreign  born  of 
our  industrial  centers,  has  resulted  in  receptivity  to  the 
promotion  among  them  of  such  projects  as  compulsory 
state  social  insurance.  Yet  when  in  California  the  extent 
of  that  sentiment  came  to  be  mathematically  recorded  in 
a  referendum  vote  the  truth  came  out  that  even  in  the 
working  class  districts  the  majorities  against  the  prin- 
ciple were  overwhelming.  California,  by  the  census,  had 
297,365  white  foreign  born  men  over  twenty-one  years 
of  age  to  548,842  white  native  born.  It  is  noteworthy  that 
the  few  industrial  states  having  a  large  newly  arrived  for- 
eign population  are  the  favorite  fields  for  paternalistic 
social  uplifters  and  investigators.  It  is  there  that,  as  the 
newspaper  men  say,  they  gather  their  **sob  statistics." 
In  such  regions,  by  reason  of  their  civic  feebleness,  their 
lack  of  the  national  spirit,  their  under-development  as 
free  citizens,  their  ignorance  of  English,  it  is  the  poor  for- 
eign working  people  who  are  by  far  the  most  numerous 
victims  of  accidents  and  sickness  and  of  misery  in  general. 

But  their  pitiable  condition  is  exceptional,  compared 
with  the  situation  in  the  country  as  a  whole.  If  Ameri- 
can wage-workers  in  general  were  as  helpless  as  the  ex- 


112 


113 


i  / 


ceptionally  worst  off  among  them  or  as  the  average  Euro- 
pean wage-worker  it  might  be  fitting  for  a  protective 
state  to  marshal  them  apart  from  the  rest  of  the  com- 
munity, take  a  percentage  of  their  wages  from  them  to  be 
paid  to  the  most  necessitous,  apportion  among  them  a  pos- 
sible equal  percentage  in  charity,  and  dictate  in  many  re- 
spects the  ordering  of  their  lives.  However,  American 
labor  standards  of  living  can  easily  be  shown  to  be  far 
superior  to  European. 

As  to  our  poorly  paid  immigrants  and  other  excep- 
tional classes  of  the  poor,  it  would  be  a  doubtful  policy 
to  take  from  them  any  part  of  their  insufficient  wages  for 
insurance.  It  is  a  far  wiser  policy  to  seek  to  expedite 
their  progress  towards  American  standards  of  wages  and 
living. 

Poverty  and  Paternalism  in  Germany 

Out  of  what  conditions  did  social  insurance  spring  in 
Germany? 

The  paternal  care  of  the  German  masses  by  the  Ger- 
man government,  in  particular  through  social  insurance, 
is  a  matter  frequently  referred  to  by  American  ' '  sociali- 
zationists ' '  as  one  of  the  significant  achievements  of  gov- 
ernmental authority  that  portend  coming  events  in  this 
republic.  Judging  from  the  numerous  scrappy  notices 
of  the  subject  to  be  had  from  any  clipping  bureau  service, 
and  from  the  views  expressed  by  casual  talkers  one  meets 
in  traveling,  as  well  as  from  the  passing  comment  of  pop- 
ular promoters  of  social  reforms  in  a  sheaf  (and  the  en- 
thusiastic oratory  of  the  soap-boxers),  one  might  conclude 
that  a  general  opinion  is  sought  to  be  created  that  govern- 
mental effort  in  Germany  had,  before  the  war,  worked  a 
variety  of  marvels  in  the  emancipation  of  its  working  peo- 
ple from  disease  and  economic  distress.  The  impressions 
gathered  from  these  and  similar  unauthoritative  sources 
would  suggest  that  many  features  of  the  millenium  had 
come  through  German  state  efficiency  in  social  affairs, 


*/l 


^ 


and  especially  that  the  interests  of  labor  were  guarded 
in  every  direction ; — that,  for  example,  state  insurance  so 
well  protected  the  working  classes  that  no  individual 
among  them  had  need  to  fear  the  economic  consequences 
of  sickness,  accident,  disability,  old  age  or  unemploy- 
ment ;  that  government  labor  exchanges  had  entirely  done 
away  with  all  private  employment  agencies ;  that  suffer- 
ing through  destitution  was  effectively  prevented;  that 
sweating  in  industry  was  a  thing  of  the  past,  strikes  and 
lockouts  rare  and  wages  the  highest  in  Europe,  while  the 
cost  of  living  to  the  workers  had  been  brought  down  to  a 
minimum  through  government  supervision  of  commerce 
and  commodities.  The  claims  for  Germany  *s  guardian- 
ship of  the  wage-workers  went  further,  and  reiteration  of 
these  claims  made  an  impression  on  public  opinion  in 
other  countries.  It  became  accepted  as  economic  truisms 
that  in  Germany  the  masses  were  comfortably  housed  in 
up-to-date  dwellings ;  that  the  death  rate  was  at  the  low- 
est point  known  to  any  people ;  that  the  misery  of  the  hun- 
dreds of  homeless  beings  sheltered  nightly  in  New  York's 
municipal  lodging  house  would  be  impossible  to  Berlin; 
that  food  prices  were  lower  than  in  England  and  rents 
cheaper ;  that  for  rich  and  poor  alike  a  thoroughly  modern 
system  of  government  had  made  Germany  the  country  to 
be  preferred  in  all  the  world. 

It  is  for  the  reader  to  decide  whether  this  parade  of 
social  accomplishments  appears  overdrawn,  accustomed 
as  he  has  been  for  years  to  the  repeated  accounts  of  Ger- 
many's wondrous  and  varied  civic  excellences. 

But  the  fact  is  that  economic  authorities — among  the 
foremost  possible  to  be  quoted,  as  is  seen  further  on — 
declare  that  not  one  of  the  foregoing  representations  is 
true.  What  is  more,  the  reader  who  has  without  inquiry 
accepted  Germany's  alleged  superiorities  as  facts  un- 
questionable will  be  astonished  to  learn  that  England  on 
official  investigation  has  established  comparisons  which 
placed  her  working  classes  in  the  essentials  of  a  civilized 


I 


<  / 


/\ 


114 

life  on  a  higher  plane  than  those  of  Germany  vrhile  in 
turn  it  can  be  easily  proven  that  the  English  working 
classes  are  economically  on  a  far  lower  plane  than  the 
American.  Citations  from  public  reports  and  private  au- 
thors, covering  all  the  points  mentioned,  here  follow: 

In  1908,  the  British  Board  of  Trade  (Labor  Depart- 
ment) issued  a  report  on  "Working  Class  Rents,  Housing 
and  Retail  Prices,"  covering  the  thirty-two  principal  in- 
dustrial cities  of  the  German  Empire.  The  following  are 
among  the  findings  of  this  report: 

IJi^r^Jerrrf  ro?t^iVuTti/po;uTaKy^.e  workers." 

had  larders  (provision  closets),  ^\^^  "'^  \r^ii%t^^^        ^ad  inde- 

existent,  and  larders  almost  so       (^^ge  2^J 

ni:i^Senf  7heToclVlir.t^^^^^  SeVca?tt%mployees  elic^^ted 
Srfrc^%Lt  in  9.554  cases  the  closet  wa^^^  shared  in^  by^l  to  10 

iriTsonl  ^''eTa^esVlllo  SoVsons,  in. 95  cases  ^^^^Ito 
40  persons,  and  in  29  cases  by  oyer  40  persons.  (P.  24.)  These 
'^rt'tTcliZ  T^rc?nih^et  VoTTL  total   Popu;.tion  o, 

TonSr -only' V4%"nr  of  the  total  population  lived  in  tene- 

"^^^E^n  ?n\rpVrrorrT;'in  ^which\he  wording  classes 
live  one  meets  with  few  such  outward  signs  of  poverty  as  are  to 
hP  !;een  in  any  llrge  English  Industrial  town.  But  when  from  the 
broad  boulevardfl^e  turns  into  the  courtyards  behind  the  street 
fronts  and  ascends  to  the  higher  stories  where  the  working  classes 
Hve  one  fs  fS  w  contrlsts  hard  to  reconcile  with  the  impres- 
silns  which  have  been  derived  outside.  As  often  as  not  the  dwell- 
•  ings^^ll  be  found  to  consist  of  two  rooms  mily-^neuse^^  as^ 
iivine-and-bedroom,  and  thus  occupied  day  and  night  all  tne  year 
IhrS  and  the  other  a  small  kitchen,  which  is  likewise  made  to 
serve  as  a  bedroom,  and  here  may  be  crowded  together  a  family 
01  four.  five.  six.  o^  more  persons.    At  the  census  of  1900.  there 


115 

were  in  Berlin  4.086  dwellings  consisting  only  of  a  kitchen,  and 
11  per  cent,  of  these  were  inhabited  by  four  persons  and  upward, 
while  over  24.000  households  lived  in  basement  tenements."  (P.  3.) 
"Berlin  is  essentially  a  town  of  large  houses.  'Barracks'  is  the 
name  given  locally  to  the  oppressive  structures  that  rise  to  a 
height  of  five  stories  in  every  part  of  the  town  and  stretch  far 
behind  the  street  front,  around  and  alongside  of  narrow  courtyards 
circumscribed  so  as  to  afford  merely  the  irreducible  minimum  of 
light  and  air  which  the  sanitary  regulations  require."     (P.  16.) 

Not  infrequently  there  are  three  of  these  courtyards, 
one  after  another,  the  four  sides  of  each  bound  by  the 
high  walls  of  tenements.  Archways  through  the  buildings 
on  the  ground  floor  level  give  access  to  the  courtyards 
from  the  street.  The  casual  American  visitor  to  Berlin 
not  knowing  any  kind  of  slum  except  that  characterized 
by  dirty  streets  and  old  houses  of  a  forbidding  aspect, 
seeing  the  comparatively  clean  and  solid  stone  street 
fronts  of  the  big  Berlin  tenements,  writes  in  his  diary, 
'* Berlin  has  no  slums.*'  Later,  if  he  completes  his  obser- 
vations on  this  point,  he  may  correctly  write :  *^ Berlin's 
slums  are  in  the  upper  stories  or  facing  the  inner  court- 
yards of  her  barracks-like  apartment  houses.''  Because 
of  its  deceptively  fair  street-front  appearance,  Berlin  has 
been  dubbed  ^*the  city  with  a  dickey." 

"The  German  working  classes  are  housed  almost  exclusively  in 
large  tenement  buildings,  frequently  constructed  round  a  central 
courtyard,  each  building  containing  a  number  of  separate  dwellings. 

.     The  English  working  man  for  the  most  part     . 
rents  a  small  separate  house.    In  the  case  of  Germany,  tenements 
of  two  rooms  and  three  rooms  are  the  most  frequent  for  working 
class  households;  in  England,  tenements  of  four  or  five  rooms  are 
the  predominant  type."     (P.  xl.) 

"The  workman  in  a  German  town  pays  for  housing  accommoda- 
tion about  one  quarter  more  than  the  workman  in  an  English 
town,  for  the  same  number  of  rooms,  exclusive  in  both  cases  of 
local  taxation."     (P.  xlii.) 

In  1905,  the  report  says,  the  number  of  horses 
slaughtered  for  the  Berlin  meat  markets  was  13,752.  In 
fifteen  cities,  the  total  per  year  runs  to  about  30,000.  Men- 
tion is  made  of  the  consumption  of  dog  flesh  in  Chemnitz, 
Dresden,  Konigsburg,  Thutte,  Munich  and  Zurickaw  (the 
Germans  say  for  consumptives). 

"White  (wheaten)  bread  is  eaten  by  the  German  workmen  to  only 
a  very  small  extent,  and  then  chiefly  in  the  form  of  breakfast 
rolls;   'black'  rye  bread,  from  flour  once  or  twice  ground,  is  used 


l^ 


I  \   ;l 


116 

extensively  in  all  parts  of  Germany;  and  between  these  two  ex- 
tremes there  are  many  varieties,  chiefly  of  bread  composed  of  rye 
and  wheat  (or  in  some  instances,  as  at  Dresden,  rye  and  maize) 
in  varying  proportions,  and  usually  known  as  'grey'  bread."     (P. 

"Butter  was  about  5  per  cent,  dearer  in  Germany  than  in  HiUg- 
land;  beef,  pork,  bacon  and  coal  from  20  to  25  per  cent,  dearer; 
mutton,  wheaten  flour,  and  paraffine  oil  35  to  40  per  cent,  dearer. 
If  we  take  the  arithmetic  meaning  of  the  above  numbers  (in 
which  the  lower  prices  for  milk  and  potatoes  in  Germany  were 
noted)  as  a  rough  index  to  the  relative  price  levels  of  the  two 
countries,  for  commodities  common  to  both,  it  is  117  for  Germany 
as  compared  with  100  in  England."    (P.  xiv). 

"For  skilled  men  in  the  building  trades  the  German  wages  are 
about  75  per  cent,  of  the  English;  for  skilled  men  in  the  engineer- 
ing trades  (machinery)  about  85  per  cent,  of  the  English;  for  com- 
positors in  the  printing  trades  (hand  compositors)  the  ratio  is 
about  83  per  cent.  Building  trades  laborers  in  Germany  earn  about 
86  per  cent,  of  the  weekly  earnings  of  the  corresponding  class  in 
England,  and  it  is  only  the  lowest  paid  class  of  all —  the  engineer- 
ing laborers — whose  earnings  in  Germany  are  as  high  as  in  this 
country.  It  is  evident  that  weekly  wages  in  Germany  are  as  a 
whole  considerably  below  the  level  of  those  prevalent  in  England." 
(P.  1). 

A  table  on  page  li,  of  this  British  report,  gives  as  the 
usual  hours  of  labor  per  week :  For  the  building  trades, 
Germany,  58  and  59 ;  England,  521/2  to  531/2.  Engineering 
trades,  Germany,  591/2;  England,  53.  Printing  trades, 
Germany,  54 ;  England,  521/2. 

"It  will  be  seen  that,  except  in  the  case  of  the  printing  trade, 
the  hours  of  Germany  are  from  8  to  12  per  cent,  higher  than  in 
England.  On  the  average  of  the  above  trades,  German  hours  exceed 
English  by  rather  more  than  10  per  cent."  .  .  .  "If,  however, 
for  the  trades  considered,  German  weekly  wages  are  to  English 
weekly  wages  approximately  as  83  to  100,  while  hours  of  labor 
during  the  week  are  as  111  to  100,  the  hourly  earnings  of  the 
German  workman  must  be  to  those  of  the  English,  roughly,  as  75 
to  100.  That  is  to  say,  for  the  building  and  engineering  trades  in 
the  towns  investigated  (32  principal  places)  the  average  hourly 
earnings  of  the  workman  in  Germany  are  only  about  three-quarters 
of  those  of  the  English  workman  doing  the  sajne  work."    (P.  li.) 

Taking  note  of  the  fact  that  the  estimates  are  based 
only  on  the  building,  engineering  and  printing  trades,  and 
cover  only  about  three-fourths  of  total  expenditures,  the 
report  concludes  that :  '^The  German  rate  of  money  wages 
per  hour  is  about  thcree-quarters  of  the  English  rate,  and 
the  cost  of  rent,  food  and  fuel  nearly  one-fifth  greater 
than  in  England/' 

In  ^^The  German  Workman^*  (1911)  (p.  129),  W.  H. 
Dawson  says  of  the  Berlin  Municipal  night  shelter  that  it 


117 

admits  ^^  between  the  hours  of  3  and  11  p.  m.,  any  penni- 
less person  who  has  no  other  resting  place''  ''on  five  suc- 
cessive days  for  a  maximum  of  five  times  in  the  course 
of  three  months.  Soup  and  bread  is  given  out  at  coming 
and  going.  At  7  o'clock  in  the  morning  the  halls  pour  out 
their  contents,  to  the  number  of  3,000  or  even  3,500,  it 
may  be,  and  they  may  remain  deserted  for  the  next  eight 
hours."  *'The  night  shelter  houses  mOre  than  half  a 
million  persons  during  the  year." 

Another  Berlin  free  night  shelter  for  men,  under  pri- 
vate management,  housed  700  a  night,  and  one  for  women 
150.  These  two,  says  Dawson,  ''entertain  more  than 
300,000  persons  during  the  year,  making  a  total  of  over 
800,000  persons  housed  and  fed  by  public  and  private 
shelters  together.  These  figures  do  not  include  the  per- 
sons cared  for  in  the  municipal  shelter  for  homeless  fami- 
lies, in  which  there  are  244  beds  for  men  and  boys  and 
240  for  women  and  girls,  nor  the  poor  people  sent  to  the 
workhouses,  the  labor  colonies,  the  hospitals,  and  the  con- 
valescent homes. 

The  New  York  Municipal  lodging  house,  caring  for  a 
population  two  and  a  half  times  that  of  Berlin,  had  in  the 
year  1913  a  total  of  172,496  lodgers,  of  whom  76,392  were 
foreign  born.  The  Berlin  proportion  would  have  given 
New  York  shelters  more  than  ten  times  this  total.  In 
1920,  the  New  York  Municipal  lodging  house,  the  Bowery 
Mission,  and  other  shelters  are  closed  for  lack  of  tenants. 

From  what  used  to  be  reported  from  time  to  time  in 
praise  of  the  German  public  employment  bureaus,  it  might 
be  inferred  that  the  registry  and  job-finding  for  wage- 
workers  seeking  employment  in  that  country  were  wholly 
a  government  undertaking  without  need  of  supplementary 
private  effort.  On  the  contrary,  W.  H.  Dawson,  in  "In- 
dustrial Germany"  (1912),  says:  "At  the  present  time 
250  employers'  associations  in  various  trades  and  parts 
of  the  country  have  their  own  labor  registries,  the  ma- 
jority of  which  serve  for  large  industrial  towns  and  their 


ti 


t 


I  I 


if 


118 

suburbs."    "In  several  localized  industries  the  employ- 
ers refuse  on  any  condition  to  engage  work-people  except 
through  their  recognized  registry."    The  object  is     to 
find  workmen  for  the  precise  work  that  waits  to  be  done. 
"The  importance  of  the  employers'  registries  will  be  seen 
from  the  fact  that  in  1911  they  filled  1,147,000  vacancies,  • 
a  number  equal  to  that  filled  by  all  the  public  general  reg- 
istries in  Germany."     The  number  of  private  employ- 
ment agencies  of  the  ordinary  type  is  estimated  at  be- 
tween 5,000  and  6,000.    Dr.  W.  D.  P.  Bliss,  in  his  report 
on  unemployment   (U.  S.  Bureau  of  Labor  Statistics 
Bulletin,  No.  76),  gives,  in  addition  to  the  government 
and  private  bureaus,  the  guild  bureaus  as  numbering 
2  400 :  the  trade  union,  1,000 ;  besides  ' ' pantattsche,    com- 
mercial, employers',  and  agricultural  chamber  bureaus. 
Herr  Delbriick,  in  June,  1914,  opposing  unemployment  in- 
surance in  the  Reichstag,  gave  as  one  of  his  reasons: 
"Germany  does  not  possess  a  very  highly  developed  and 
co-ordinated  network  of  employment  offices." 

W.  H.  Dawson  thus  describes  the  strike  and  lockout 
situation : 

"In  the  three  years  1909-11,  there  were  1,462  lockouts 
as  compared  with  6,216  strikes,  and  while  the  strikers 
numbered  469,414,  the  work-people  locked  out  numbered 
375  407.  ...  In  1911  alone  the  strikes  numbered  2,566 
(1 898  individual  and  668  group  strikes)  and  the  lockouts 
1 115  •  but  while  the  strikes  affected  8,276  undertakings 
the  lockouts  affected  10,834;  and,  while  the  number  of 
work-people  who  struck  work  or  became  unemployed 
owing  to  strikes  was  167,900,  the  number  unemployed  ow- 
ing to  lockouts  was  222,800 In  1911  there  were  fifty 

lockouts  for  every  one  which  occurred  in  1899. 

Of ' '  home  "  or  "  house ' '  industries— those  in  which  the 
wage-worker  performs  factory  labor  in  his  dwelling  or 
tenement-Dawson  says  they  "still  provide  employment 
for  little  less  than  500,000  persons,"  out  of  a  total  of 
11,256,000  in  Germany's  industrial  occupations,  including 


'.m 


n 


119 

the  mining  and  building  trades.  Berlin  had  '^  greatly  ex- 
ceeding^' 100,000  home-workers,  of  whom  there  were  m 
the  clothing  trades  at  least  50,000,  not  working  for  manu- 
facturers but  for  about  4,000  middlemen  (** sweaters' 0- 
In  1907  the  number  of  males  in  the  home  industries  in 
Germany  was  154,988,  and  of  females  327,448.  The  cloth- 
ing, toy,  textile,  and  cigarmaking  industries  employ  the 
majority  of  home-workers.  As  for  wages:  ^*A  labor 
deputy  in  the  Eeichstag  stated  in  the  course  of  debate, 
in  March,  1908,  that  the  average  wages  of  whole  families 
working  at  home  in  cigar-making  did  not  exceed  10  shill- 
ings ($2.44)  a  week  all  the  year  round,  and  that  for  those 
earnings  excessive  hours  had  to  be  worked.  "  *'As  the 
result  of  his  investigation  Herr  Paul  Gohre  came  to  the 
conclusion  that  the  weavers  of  the  Ore  Mountain  districts 
earn  on  an  average  from  6  to  9  shillings  ($1.46  to  $2.20) 
per  family  for  a  long  week  of  work,  and  in  better  times 
from  10  to  12  shillings"  ($2.44  to  $2.93). 

As  to  housing,  W.  H.  Dawson  says  (p.  88) :  ''How 
serious  the  question  [of  housing]  is  in  the  metropolis 
is  proved  by  the  terrible  over-crowding  of  the  workers 
and  the  poor,  the  exorbitancy  of  the  rents  they  pay,  and 
the  awful  insufficiency  of  the  accommodation  with  which 
they  must  perforce  be  satisfied.  Grouping  the  larger 
towns  of  Germany  together,  it  has  been  estimated  that  80 
per  cent  of  the  resident  work-people  live  in  houses  inade- 
quate either  in  size  or  arrangement— or  both  (which  is 
generally  the  case)— to  the  maintenance  of  a  respectable 
moral  family  life,  though  on  the  average  the  rent  paid  is 
fully  a  quarter  of  their  earnings.  In  the  smaller  towns 
matters  are  only  slightly  better,  for  while  the  rents  paid 
are  not  so  high  there  the  accommodation  is  very  inferior. 
Dwellings  of  one  bedroom  and  a  kitchen  are  very  common, 
and  three  rooms  represent  a  relatively  satisfactory  state 
of  things." 

The  mortality  rates  per  1,000  inhabitants  for  Berlin, 
London  and  New  York  (the  so-called  crude  mortality 


Hi  I 


i 


i 


f  I 


lit 


120 

rates  exclusive  of  still-births),  as  shown  in  the  following 
tabular  statement,  give  Berlin  its  true  statistical  place 
in  this  respect  quite  different  from  what  it  has  enjoyed 
in  popular  estimation. 

Year  Berlin'  London"         NewYork^ 

1903 16.58  15.3  18.0 

1904 17.04  16.4  20.1 

1905 17.13  15.5  18.4 

1906 15.88  15.6  18.6 

1907 15.63  15.2  18.3 

1908 15.73  14.6  16.3 

1909 15.53  14.9  16.0 

1910 14.64  13.7  16.0 

1911 15.59  15.0  15.2 

1912 15.20  13.6  14.5 

1913 14.10  ...  14.3 

The  reader  will  observe  that  the  London  death-rate 
was  uniformly  lower  than  that  of  Berlin,  while  in  the  last 
three  years  quoted  New  York's  figures  were  lower  than 
Berlin's.  Further,  whereas  the  Berlin  death  rate  is  for 
a  population  almost  exclusively  native  and  for  genera- 
tions subject  to  the  good  intentions  of  the  German  health 
laws,  the  New  York  death-rate  is  for  a  population  largely 
composed  of  immigrants. 

Thorstein  Veblen,  in  ** Imperial  Germany,"  1913 
(p.  210),  thus  gave  Germany  its  civic  place  in  the  world: 

• 

"Experience  would  appear  to  teach,  somewhat  unequivocally, 
that  German  rule  is  a  good  deal  of  a  material  burden,  and  that, 
merely  as  a  question  of  private  economy,  a  man  will  commonly  be 
more  at  ease  under  almost  any  other  government  establishment 
within  the  civilized  world.  Taxation  is  relatively  heavy,  not  to  say 
exorbitant,  under  the  empire,  and  the  degree  of  interference  with 
private  affairs  commonly  exercised  by  the  state  exceeds  what  pre- 
vails elsewhere  and  is  indeed  endurable  only  by  long  and  thorough 
habituation." 


1  «< 


'Statistiches  Jahrbuch  der  Stadt  Berlin,"  vol.  32,  Berlin,  1913,  pp. 
126,  11,  and  "Statistiches  Jahrbuch  fur  das  Deutsche  Reich,"  Berlin. 
1914,  p.  20. 

*For  1903-1910:  London  County  Council,  London  Statistics,  vol.  22, 
1911-1912,  p.  65.  For  1911  and  1912:  U.  S.  Bureau  of  the  Census  Mor- 
tality Statistics,  14th  "Annual  Report,"  1913,  p.  19. 

•U.  S.  Bureau  of  the  Census,  Mortality  Statistics,  7th  "Annual  Re- 
port," 1906,  p.  25;  11th  'Annual  Report,"  1910.  p.  15;  and  14th  "Annual 
Report,"  1913,  p.  16. 


I    >j 


ii» 


121 
British,  German  and  American  Wages  Compared. 

General  comparisons  of  wages  and  hours  of  labor  in 
Berlin,  London  and  New  York  can  be  indicated  by  the 
figures  for  typical  occupations.  The  following  table  (from 
data  of  the  Department  of  Labor)  shows  the  union  scale 
of  wages  in  the  occupations  named  as  reported  for  the 
three  cities  at  the  periods  indicated.  The  figures  are  for 
dates  not  far  apart  before  the  war  and  for  those  occupa- 
tions for  which  some  comparable  data  can  be  obtained. 
As  these  are  union  scales,  they  are  of  course  minimum 
rates,  to  which  the  actual  rates  in  Berlin  and  London 
approximate  more  closely  than  would  be  the  case  in  New 
York ;  that  is,  the  actual  current  rates  of  wages  in  Berlin 
and  London  as  fixed  by  collective  agreements  are  practi- 
cally the  actual  rates  of  wages  received  in  those  cities. 


LT 


i 


f  I 


<;) 


<D 


ft)  OS 
^  CO 


o 


I- 

§5 


1*2 

OS 


«> 


o 


03 

«:    QQ 
•*»   O 

en   «1 

p 

I! 

O   Pi 
OS  « 

o  bo 

WW 


122 


^! 

"♦*  u 
•^  as 

IS 

O  cd 

j«  a> 


o 

O 


CO 


o 


o  o  o  o  o  o  o 

U3  U3  U5  U3  irt  U5  iO 


2Q 


in   in 
^^ 

00  CO 

"*  in 


o  © 
in  in 


00  c<i 


O 


CO 


C4 

O  00 


eo  CO 

C<I  CO 

o  o 


CO 

o 

C<l 

•  CO  c<i  eo  CO 

V  CO  m  CO  CO 

I  c^  i-H  c^  cq 

CO       .       .    -•       • 

00  o  o  o  o 


t^t^y-i  »9-««- «»■««- 


in 
oo 


o 


Oi 


in 


CO  o 


cs 


««- 


O  CO 
<D  CO 

■^'  in 


C5^ 


b 


e^ 


00 


OS 
CO 


1^        ^c* 


rH 

o 
oo 


o  o  o  o 

tH  iH  iH  iH 

I      I      I       I 

00  00  00  00 


O  O  t-  '^ 
O  OS  «0  CNI 
iH  rH  rH  C^ 

O  O  O  O 

«n^  ^^r  «^^  ^rr 


I 
00 


o 
c^ 


o 

iH  OS  OS 

I  I    I 

oo  00  00 


o      as  in 
OS      T-i  la 


OS 

I 

00 


«o 


o 


o  o 

»9-60- 


09 


in  in 


oo 


^^    TJ^    ^<    ^^    ^<    '^    ^N 

^J'  ^Ji   ^!p  ^p   ^(J<  ^T*    ^' 


CO  Tf 

in  in 


00  00 


in  in 


a>  a>      00      oooooooooooooo 


00 


•^  OS 


OS  OS 


00  00 


CIS 


eo 


oo  o  oooinoQino  in  oo  oo 

oo  o  oinoc<iooMTt<  c^  oin  oo 

oso  o  co^-c^ot»o?o  o  ■^c<i  -^to 

rHC<I  cq  COC^CICOrHCOC^  CO  C<IC^  CSJCQ 


o  o 
o  o 

•  • 

O  CO 
CO  CO 


oinooooooo  00 

inciooooooo  oo 

t^-eotnco-^coto  «o 

•        ••••••  • 

ooooooo  o 


o  o 


O  C<l 

O  Tfl 

in  in 

•        • 

O  O 


t-  CO 

O  CO 

to  t^ 

•         • 

O  o 


00 

«PQ 

n 


OQ 

fl  o 

cd  ti 

OQ  Cd 

GfS  OQ    .  . 

t-i  t-i  ta 

<o  <o  o 

n 


O) 


a 

QQ 

o 

U,   •• 
rt    CO 

^^ 

OQ  rt  >,^  m 
U4  ^^    -  *^  ' 

«'0 


0) 


OQ 

o 

03 


Ui    0}    cd  _■  ,^  -^ 


£2« 

■M  -»->   g 
03    09    M 

Ctf    Oj    S 


OQ 

<a 


C3  O  5  « 


o 

ti 

ai 

M 

o 
o 

Xi 

OQ    rt    C3 

_  r;      *^ 

2  p-S  OQ  a 

^  J"  2  *-"  o 
73  -^  ft  o 


<v 

a 

A 
CQ 

O) 


^ 


3 


B  M^  OQ  a 
a>  3  a> --}  ^  ig  «J  fti? 

^  <=>  a  o  .S 


fl  ~  e3 


■^^  -^  -^^ 

cS 


2*^  (- 

W    »H     O 

1^    03    QQ 

S     *-     *H 

a  o  o 
p^  -^  -»-' 

"O  ■'"'  ••-< 
ri    OQ    03 

rt  o  o 

^  a  a 
•5  P  o 


00 


»H 

PU 


(I4 


iH 

o 

^    g 

<D         O 

^   WrH 

Tj  eg     ~ 

a  o) 

O  fl  ° 


C» 


cd 


eo    o)   O 

J:     ^ 

CQ  ••     •<-" 
.c<i  Ph 

COrH_, 

os^ 
iH  c3  a> 

OS  t-j^ 
iH  -t-> 

-H    ^J    ri 

"  -a  --^ 


a> 


o 

(M 
O 

QQ 
O 


73 

OS 

be 
03 


03 
o 

03 

(V 

Q 


03 

W) 

(33 


CM 

O 

OQ 

(D 
-t-> 

03 

B 


CM 

o 

"3 

a 
o 


nJ 

a 

oS 


"02 
a>  - 
bO 
:o3   •• 

«  2 

«M  H 

•l-H 

(1   CM 

03  O 


03  >» 

"?  CQ 

.a  ^ 


P  U5 

**iH 
^  CO 

o 

*(!>    QQ 

a   . 
CO  d 

f— I 

03  PQ 

a° 

o  « 
•a  > 


osr 

iH    03 

.  a 

xi  ^ 

•1-1 

^  ►h 
CO  4j 
OS    03 

.  3 

OT3 


02 


03 

a 


a 

03 

CS 

.a 

03 
1^ 


03 
X 

a 
o 

PQ 

(3 

03 


(-1 

pq 
a 

oi 
03 


<D 


a 

t3Q 


0)    H^    -M 

TJ    Cl3   cS 

3  eS  0} 


mo;^:^^? 


>»•  ••^ 
r    P. 

.a  •'^ 

in  S  ? 
t.PQ^ 

CO  CM    OQ 

a  o  ^^ 

CO  .5  *^ 
in  43 

PQ 


QQ 

o 

a 

B 

o 

-a 
a 
a 


OB 

O 


123 

The  following  table  gives  the  actual  earnings  and 
weekly  hours  of  labor  in  the  occupations  named  in  Berlin, 
London  and  New  York.  These  statistics  have  been  com- 
piled from  the  various  studies  already  mentioned  on  the 
cost  of  living  and  rates  of  wages  undertaken  by  the  Brit- 
ish Board  of  Trade  at  various  times  prior  to  1912.*  The 
data  should  be  comparable  as  they  were  collected  by  a 
single  agency  with  the  common  purpose  of  comparison  as 
to  wages,  prices,  hours,  rents,  etc.,  prevailing  in  the  dif- 
ferent cities.  In  this  connection  reference  is  made  to  Bul- 
letin No.  93  of  the  U.  S.  Bureau  of  Labor,  which  presents 
a  summary  of  these  investigations  of  the  Board  of  Trade 
and  gives  comparable  data  for  the  three  countries  as  a 
whole,  but  not  for  separate  cities. 


*  "Report  of  an  Inquiry  by  the  Board  of  Trade  into  Working-Class 
Rents  and  Retail  Prices,  together  with  the  Rates  of  Wages  in  certain 
Occupations  in  the  Principal  Industrial  Towns  of  the  German  Empire. 
With  an  Introductory  Memorandum  and  a  Comparison  of  the  Condi- 
tions in  Germany  and  the  United  Kingdom.  London,  1908,  cxi,  548  pp. 
(Cost  of  Living  in  German  Towns.)" 

"Report  of  an  Inquiry  by  the  Board  of  Trade  into  Working-Class 
Rents,  Housing  and  Retail  Prices,  together  with  the  Rates  of  Wages  in 
Certain  Occupations  in  the  Principal  Industrial  Towns  of  the  United 
States  of  America.  With  an  Introductory  Memorandum  and  a  Compari- 
son of  Conditions  in  the  United  States  and  the  United  Kingdom.  Lon- 
1911,  xcll,  533  pp.     (Cost  of  Living  in  American  Towns.)" 

"Report  of  an  Inquiry  by  the  Board  of  Trade  into  Working-Class 
Rents  and  Retail  Prices,  together  with  the  Rates  of  Wages  in  Certain 
Occupations  in  Industrial  Towns  of  the  United  Kingdom  in  1912.  Lon- 
don, 1913,  cxviii,  pp.  396.     (Cost  of  Living  of  the  Working  Classes.)" 


vi 


124 


I 

s 

I 


42 

o 


CO 


o 

lA  lA  U3  a> 
1-i  i-t  y-i  to 

00 


CM 


1^ 


Vji^tH         ^  r-l  tH  " 


o  o 


t-  t- 


o  d«^ 

rH  1-1  «0 

OO  CO  Tt< 

CJ  Tf  QO 


Od 


O  U3 


U3 
O 
OS 

lH  W 
.CO 

O 


CO 
iH 

Oi 

to  iO  U3  OS 

CO  iH  r-t  CO 


O  O 


'  •  •  •  •  • 

O  iH  iH  OO         t^  t>- 

wiJ    _^    M^    ^  r4       M 


o  CO  t^  CO  o 

>-*  [^  U3  Tf  U3  lO 

o 

OS 


CO 

os 

I 

OS 

OS 


iH  la 

Ca  CO 

d  w 


CO  CO  CO  CO 
LA  U3  U3  U3 


O  O  O  O 
CO  CO  CO  CO 

J       I       '      ' 
!>•  t-  t<.  t- 

lA  LA  to  LA 


LA  00  O  -^ 
^  LA  O  t- 


I 
rH  CO  LA  OS 
LA  00  C>1  00 

CO*  Oo'  CO  CO 


■^  rj« 


OS  t»-  OS  LA 

Jill 
t-  O  CO  t^ 

C^  CO  t>  00 

00  t>  00  Tjl         00  00  OS  OS 


^  ^  ■^  •^ 

LA  LA  LO  LA 


CO  CO 
OS  os' 

I    I 

CO  LA  CO  CO 
O  LA  b-  t» 


LA 


00  00 

OO  00 

CSI  CM 

I    I 

CO  O  O  00  LA 
C<J  CO  1-J  CO  00 

tH  ci  LA  d  (-^ 

CO  ca  eg  CO  CM 


CO 
LA 


coco 

CO  00 


^5*   ^J*    ^^    ^f* 

LA  lA  LA  LA 


CO  CO 

CM  CM 

t*0  O  iH 
t^  OS  OS  CM 

OS  r-i  iH  00 
iH  CM  CM 


^T*  ^T*   ^I^  ^J* 
LA  LA  LA  LA 


O  00  t* 
CO  CM  t- 


LA 
CM 


CM  O  OS  00 
CM  CM  iH  iH 
I       I       I       I 
LA  LA  lO  iH 
CM  CM  CM  CM 

00  00*  00  LA         00 


00 
LA 


00 


OS 
CM 

• 

iH 
C<l 

I 
LA 
CM 


O  O  lA  O  CO 
CO  CO  CO  CO  CO 


■^  Tt<  CM 

00  00  CM 

LA  LA  t^ 

I       I  I 

rH  LO  Tj<  CM  CO 
1H  CM  00  iH  •^ 

LA  LA  00  CO  CO 


00  00  00  t-  b-  Tt« 
■^  -^f  "<*i  t>  t»  LA 


OS  00 
CM  ^ 

•  • 

CM  T-t 
I       I 
t-  iH  t"-  OS  t-  iH 
iH  CM  iH  LA  t-  e>J 

CM  LA  CM  OS  CM  lA 


LA 


CO 
O 

o<5 
I 

00 

o 

CO 


o 

CO 


o 

CO 


LA 

CO 

LA 


o  o  o  o  o  o 

CO  CO  CO  CO  CO  CO 


LA  OS  b-  CO  O  LA 
CM  CM  t-  t^  CO  CM 

00  iH  CM  CO  rj^  LA 
lH  CM  rH  iH  iH  iH 
I       I       I       I       I       I 
iH  U.  t-  t-  t-  00 
CM  CM  iH  iH  t>  00 

LA  00  CM  CM  CM  CO 


«> 
8 


00 

« 
ei 

be 
a 


03 
CO    U, 


QQ 

ti    QQ 

O      t4 


QQ 

U 
0) 

>> 

^^ 
J4 

JO 

Xi 

^  w 

eS  u 

OD  jQ 

®^ 

'(^ 
u, 

eU 


*3  rt  S  "5  o 
;a  n  0}  U  CU  0^  &4  S 


Pi 
O 

.a 

00 
CQ    m 

rt  c  « 
oa  TJ  'O 

?  5  2 

ea  fcH  o 

El" 

o 


0} 


s 

03 

o 
05 


OQ 

0} 

s 

a 

u 


OQ 

o 


QQ 


o 


ja 

c3 


to 

a 
o 


OI  w  o 

s 


0} 

O 

OQ 

*s 

> 


QQ 

hi 

b£ 

O   t" 


c 

Oh 


•  •  BO 

<D  £ 

»  g 

""  O 

•=« 
P 

P 


QQ 

(h 
O 


OQ  *J 


OQ 


ki 


QQ 

03   0)  ->-> 
•TJ  O 

Ctf  ^    OQ 

q  ea  «J 


09 

?  5 

m  S 

&£  ki 

^? 

03 

t.    U 
flj  •I— 


P  -M    b 

§  b:  M  ^ 


04 


rt  C  « 


O  4->  hi  QQ 
U  CO  V  hi 
^  h  *J  p- 

•»•<  »-t  r-r. 
0Qfe<:    ■ 

oQ 
hi 
O 


1^ 


hi 
cd 

rt  hi  'O 
01  03  h4 
>»  <u  -^ 

f©       -^ 

P'O  h 
O  ^3   ® 

a;   rP    4-1 


J4 
V 

o 


o 


CO 

3 

o 

be 

a 


> 

u 

a 

c 

o 
c 
J^ 

V 


"00  -tJ-H 

ir>(4-i  «^ 

.-  O  CO 

Sis  « 

nl   X   Si  S 

5*3  >v  ^ 

««  *'«  ^ 

eS^„ 

..o-g  bo 

u  jj.a  « 


rt 


c2.o  " 

^lu  =  ' 

tj;  CO  "^ov 
cJS'o-' 

O   UVO 

E  u-M  c 
4>  n  o 

•—  •w  •<-•  i. 


Cfl    IT       . 
CO    I/j  to 

-<^ 

00 


to   c 
vc 

•a 


1)   O  '-'    f 

En  o^  (0 
.    D  i-i  k-  rt 

(<  o  be  >,  ? 


bo 


rt 


(0 


'^  o   .73  5 


PQ  o  ^      '- 
'-     —*?,  c 

>^o^ 


<o 


""  "f  S  c 

•'"01!**' 

C2  ^vo,0 

^     U     -^     (^     M  ^^'^ 


c 
o 


in  00  2. 


to 


P 
"P 
P 

o 


«i    CO 

■^  c«^  y 

a     •^'*i  be— 
Ejs-^o  c^ 

0.2  ©;;-  rt 

Jf  >  (U    «oJQ  2 
UCUH  o  c  fl  E 

e  la  w  ■ti 

S  S  ■«  «• 
O  W   u  -w 


*x^ 


125 

The  two  foregoing  tables  show  that  before  the  war 
money  wages  in  the  United  States  were  double  or  treble, 
or  in  cases  even  approaching  quadruple,  the  money  wages 
of  Germany. 

If  any  American  reader  who  has  entertained  delusions 
as  to  Germany's  socio-economic  advantages  over  Great 
Britain,  or  who  has  been  captivated  by  the  soap-box  argu- 
ments that  the  workingman  is  better  off  in  Germany  than 
in  the  United  States,  can,  after,  weighing  the  preceding 
statements  of  fact,  find  consolation  in  the  usual  assertions 
of  his  favorite  emotional  statisticians  relative  to  the  tre- 
mendously greater  cost  of  living  in  America,  his  confi- 
dence in  improbabilities  is  unshakable.  He  will  believe 
that  the  exportations  of  staple  farm  products  from  this 
country  to  Europe  are  due  to  such  an  absurd  commercial 
proceeding  as  ** dumping''  on  the  old  world  a  surplus  at 
a  lower  price  than  can  be  obtained  here  near  the  farms 
on  which  the  products  are  grown;  or  that  the  beef  at 
thirty-five  cents  a  pound  in  Berlin  was  cheaper  than  beef 
at  twenty-five  cents  in  New  York ;  or  that  wheat  flour ; 
when  quoted  per  barrel  in  New  York  at  $6.50,  was  really 
dearer  than  black  bread  flour  at  a  higher  price  in  Berlin ! 

In  1914,  before  the  war,  George  A.  Isaacs,  General 
Secretary,  the  National  Society  of  Operative  Printers 
and  Assistants  of  Great  Britain,  visited  the  United  States 
as  a  delegate  to  the  twenty-sixth  Annual  Convention  of 
the  International  Printing  Pressmen  and  Assistants' 
Union  of  North  America.  On  his  return  he  published  a 
report  of  126  pages,  in  which  he  went  more  deeply  and 
intimately  into  the  practical  affairs  of  the  wage-worker 's 
life  in  America  than  has  been  usual  with  European  inves- 
tigators in  this  country.  Among  other  passages  in  his 
report  was  a  table  giving  comparative  prices  in  London 
and  New  York  of  the  commodities  consumed  by  working 
class  families.    The  following  is  from  his  summary : 

"The  American  workman  has  a  great  advantage  over  the  London 
workman  when  considering  the  purchasing  power  of  his  wages.  It 
is  also  beyond  question  that  the  standard  of  living  for  an  American 
workman  is  much  higher  than  that  of  the  English  worker.    For 


til 


==3: 


f 


ki^ 


126 

example,  good  fruit,  and  plenty  of  it,  is  a  common  article  of  diet 
upon  an  American  workman's  breakfast  table,  and  at  all  times.    To 
the  average  English  workman  fruit  is  in  the  nature  of  a  luxury 
reserved  for  his  midday  meal,  or  taken  home  on  a  Saturday  after- 
noon for  the  enjoyment  of  the  wife  and  kiddies.    Meat  is  eaten  at 
practically  every  meal;  and  I  am  satisfied  after  inquiry  that  the 
food  generally  is  as  good  as  English  food.    Three  meals  a  day  is  the 
rule  in  America— breakfast,  dinner  and  supper  (afternoon  tea  being 
quite   unknown).     There   is  a   greater   range  of  commodities   to 
choose  from  and  a  far  greater  quantity  is  usually  consumed  by  the 
American  than  by  the  Englishman.     Taking  all  these  things  into 
consideration,  it  can  easily  be  understood  that,  after  meeting  the 
necessary  expenses  for   rent,   clothing,  and  food,   there   is   a   far 
greater  surplus  in  the  hands  of  an  American  workman  than  there 
is  at  the  disposal  of  his  English  confrere  of  the  same  grade.    It  will 
be  noticed  that  luxuries  on  'the  other  side'  are  often  cheaper,  as  will 
be  seen  by  reckoning  the  price  of  tobacco,  whilst  my  reference  else- 
where m  this  report  to  the  cost  of  amusements  at  Coney  Island 
shows   that  amusements   and   pastimes   are  also   cheaper. 
The  'real'  wage  of  a  workman  is  not  the  actual  number  of  pieces 
of  money  earned,  but  the  amount  of  goods  to  be  obtained  in  ex- 
change for  it.     .     .     .     Apply  this  definition  to  the  remuneration 
of  printers'  assistants  in  New  York  and  London,  and  it  will  at  once 
be  apparent  that  the  'real'  wage  of  the  American  is  far  in  advance 
of  that  of  the  Englishman.    In  addition  to  this,  the  American  has 
a  higher  standard  of  life,  additional  comforts,  and  more  amuse- 
ments than  we  have,  thus,  in  my  opinion,  making  life  in  America 
far  more  enjoyable  in  all  respects  than  it  is  in  London." 

The  disparity  of  wage-levels  in  Great  Britain  and  the 
United  States  continues  today  with  little  modification. 
Eates  of  wages  in  England  mentioned  in  a  trade  union 
publication  February  6,  1920,  ran  as  follows :    The  hat, 
cap  and  millinery  trade  board  issued  a  notice  of  proposal 
to  fix  minimum  rates  for  male  workers  of  22  years  of  age 
and  over  at  28  cents  per  hour,  and  for  female  workers 
other  than  learners  at  17  cents  per  hour ;  piece-work  basis 
time  rates,  31  cents  per  hour  for  male  workers  and  19 
cents  per  hour  for  females.    In  the  cocoa,  chocolate  and 
confectionery  trades,   the  employers   and  the   national 
union  of  clerks,  after  arbitration,  recommended  rates 
varying  from  $6.10  per  week  at  16  years  of  age  to  $21.87 
at  27.    In  the  retail  custom  tailoring  trade  board  there 
was  a  proposal  to  ^  minimum  rates  for  male  workers 
other  than  apprentices  and  learners  at  34,  36,  38,  and  42 
cents  per  hour,  according  to  term  of  service  and  grade  of 
garments.    The  piece  work  basis  time  rates  in  all  cases 
were  to  be  three  cents  per  hour  higher.     The  official 
** Labor  Gazette,''  February,  1920,  contains  tables  giving 


127 

principal  changes  in  wages  taking  effect  in  January. 
These  show  that  none  of  the  skilled  workers  in  the  build- 
ing trades  (bricklayers,  masons,  carpenters,  roofers,  plas- 
terers, painters)  are  paid  more  than  50  cents  an  hour; 
in  the  smaller  population  centres  the  average  runs  below 
35  cents.  In  London,  furniture  movers  receive  from 
$14.58  a  week  for  porters,  to  $18.24  for  steam  wagon 
drivers.  Book  and  job  compositors,  electrotypers  and 
stereotypers  receive  $20  a  week ;  daily  and  Sunday  news- 
papers, electrotypers  and  stereotypers,  $25.75.  New  York 
wages  in  the  occupations  mentioned  run  today  at  least  50 
per  cent  above  the  figures  for  England.  In  cases  they 
are  double. 

It  is  to  be  remembered  that  in  the  countries  of  Europe 
wages  stood  highest  in  England  and  Germany.  Belgium 
affords  an  example  of  the  low-wage  countries  of  northern 
Europe.  In  ^^La  Belgique  Moderne"  (1910),  Henri  Char- 
riaut  says  that  in  the  iron  and  steel  works  of  that  coun- 
try the  134,000  wage-workers  averaged  75  cents  a  day 
in  1908  and  80  cents  in  1907.  On  the  state  railways,  sta- 
tion men  and  train  men  averaged  from  50  to  60  cents  for 
a  day  of  12  hours.  Locomotive  firemen  earned  less  than 
80  cents  a  day,  the  engineers  not  quite  $1.10.  Among  the 
''frock  coat  proletariat''  employees  in  some  of  the  com- 
mercial  houses  were  paid  $5  a  month  the  first  year,  $10 
a  second  and  $15  the  third  year,  and  in  the  years  follow- 
ing, $20.  In  banks,  clerks  who  were  fathers  of  families 
were  paid  not  more  than  $30  a  month,  and  cashiers  and 
bookkeepers  drew  $40.  In  the  south  of  France,  late  in 
1916,  responsible  bank  employees  were  paid  as  little  as 
$40  to  $50  a  month. 

In  Europe  living  is  cheaper  than  in  America  for  two 
social  strata,  the  workers  in  extreme  poverty  and  the  peo- 
ple of  wealth.  This  paradoxical  assertion  has  its  explana- 
tions in  broad  social  facts.  The  wealthy  get  cheap  their 
domestic  service  and  certain  luxuries  produced  by  the 
low-paid  artisan  class.     The  numerous  very  poor  live 


I 


128 

cheap  at  a  standard  of  self-denial  prescribed  by  their 
usual  deprivation  of  means.  They  do  without  dear  things 
which  the  American  wage-worker  regards  as  necessaries ; 
they  use  or  consume  cheap  things  the  American  declines 
to  buy.    Every  expenditure  considered— food,  clothing, 
lodging,   schooling,   recreation,   amusements,   dentistry, 
medical  attendance— it  would  have  been  just  as  hard  for 
an  American  to  live  in  Germany  on  the  wages  prevailing 
in  Germany  before  the  war  as  it  would  have  been  for  him 
to  live  on  the  same  wages  in  America.    It  was  not  so  hard 
for  the  Germans  habituated  to  impoverishment,  one  par- 
ticular reason  being  that  whereas  in  America  high  wages 
encourage  the  production  of  high-grade  commodities,  in 
Germany  low  wages  lead  to  the  production  of  certain  low- 
grade  commodities.    Among  Americans  there  is  little  de- 
mand for  wooden  shoes,  five-dollar  suits  of  clothes,  one 
or  two  room  tenements,  black  bread  or  fourth  class  pas- 
senger cars. 

The  facts  just  presented  describe  national  conditions. 
They  forcibly  depict  the  depths  of  the  poverty  in  Ger- 
many which  gave  birth  to  government  insurance  of  the 
working  classes.  They  explain  in  part  why  Great  Britain, 
whose  net  emigration  of  workers  averaged  nearly  a  quar- 
ter of  a  million  a  year  for  the  last  decade  previous  to  the 
war,  followed  Germany  ^s  lead  in  social  insurance.  They 
help  explain  differences  between  the  labor  movements  of 
the  old  world  and  the  new.  They  also  plainly  indicate  rea- 
sons why  so  many  American  workingmen  prefer  to  de- 
pend on  themselves  to  make  their  way  in  the  world,  sup- 
plementing their  individual  efforts  with  the  strength  of 
their  trade  organization. 

J.  W.   SULLTVAN. 


i 


A  STUDY  OF  UNEMPLOYMENT  INSURANCE 

WITH  PARTICULAR  REFERENCE  TO 

BRITISH  EXPERIENCE. 

Unemployment  insurance  holds  a  place  as  a  branch  of 
social  insurance,  but  is  as  yet  rather  in  the  background. 
It  is  far  from  unfamiliar  in  America,  many  of  our  labor 
unions  paying  substantial  ** out-of-work  benefits."  But 
generally  such  benefits  are  paid  during  strikes  as  well  as 
during  involuntary  unemployment,  and  therefore  are  pop- 
ularly regarded  as  one  of  labor's  combative  weapons 
rather  than  as  social  insurance. 

Compulsory  unemployment  insurance  is  to  be  found 
only  in  Great  Britain,  and  there  only  in  a  restricted  and 
distinctly  experimental  form.* 

Under  the  British  unemployment  insurance  law,  which 
took  effect  July  15,  1912,  all  manual  workers  (in  1914 
about  2,300,000)  in  seven  specified  industries  (building, 
construction  of  works,  ship-building,  mechanical  engineer- 
ing, iron  founding,  construction  of  vehicles  and  sawmill- 
ing — besides  some  temporary  additions  during  the  war) 
are  compelled  to  insure,  one-third  at  the  expense  of  the 
state,  with  the  balance  of  the  charge  divided  equally  be- 
tween employers  and  employees.  The  usual  joint  contri- 
bution of  the  latter  is,  or  was,  5  cents  (2y2d.)  each  per 
week.  The  usual  benefit  is  $2.68  (lis.),  recently  raised 
from  $1.70  (7s.),  per  week,  exclusive  of  the  first  week  of 
unemployment,  and  is  limited  to  fifteen  weeks  in  any  one 
year  and  to  one  week's  benefit  for  every  five  week's  con- 
tributions. 

To  be  entitled  to  benefits  a  workman  must  prove  that 
not  less  than  ten  full  contributions  have  been  paid  by  him, 
that  he  has  duly  applied  for  benefit  and — with  some  quali- 
fications— registered  daily  at  a  labor  exchange;  that  he 
has  been  unemployed  continuously  from  the  date  of  such 

♦But  see  footnote  as  to  Italy,  supra^  p.  39. 

129 


^r 


l^» 


130 

application ;  that  he  is  capable  of  work  but  unable  to  ob- 
tain suitable  employment ;  that  he  is  not  drawing  sick  or 
disablement  benefits;  and  that  he  has  not  exhausted  his 
right.  But  where  a  workman  loses  employment  through 
misconduct,  or  voluntarily  leaves  his  employment  without 
just  cause,  he  is  disqualified  for  a  period  of  six  weeks. 
And  no  benefit  is  payable  to  a  workman  who  has  lost  em- 
ployment by  reason  of  a  stoppage  of  work  due  to  a  trade 
dispute  at  the  premises  at  which  he  was  employed;  but 
where  separate  branches  of  work,  that  are  commonly  car- 
ried on  as  separate  businesses  in  separate  premises,  are 
carried  on  as  separate  departments  on  the  same  prem- 
ises, each  of  such  departments  is  to  be  deemed  separate 
premises.  And  an  unemployed  workman  may  decline  an 
offer  of  employment  in  a  situation  vacant  in  consequence 
of  a  stoppage  of  work  due  to  a  trade  dispute ;  or — in  the 
district  where  he  was  last  ordinarily  employed — at  a  rate 
of  wages  lower  or  on  conditions  less  favorable  than  those 
he  habitually  obtained  or  would  have  obtained  had  he  con- 
tinued to  be  employed  in  that  district,  or — in  any  other 
district — at  a  rate  of  wages  lower  or  on  conditions  less 
favorable  than  those  generally  observed  in  such  district 
by  agreement  between  employers'  and  workmen's  associ- 
ations, or,  if  there  be  no  such  agreement,  then  those  gen- 
erally recognized  in  the  district  by  good  employers. 

Under  a  special  provision  of  the  act  (§106)  approved 
associations  of  wage-workers  (invariably  trade  unions), 
which  pay  out-of-work  benefits,  may  be  reimbursed  by  the 
government  in  an  amount  not  to  exceed  one-sixth  of  such 
benefits  paid.  This  resembles  the  ** Ghent  system'*  of 
voluntary  insurance,  discussed  later.  In  1914  the  num- 
ber of  such  *  *  approved  associations ' '  was  344,  being  prin- 
cipally the  local  unions  of  some  few  international  trade 
unions.  The  number  of  persons  then  insured  in  such  as- 
sociations was  660,000.  But  recently,  according  to  re- 
ports, this  form  of  the  unemployment  insurance  has  been 
suspended. 


-^4 


131 

The  technical  merits  of  this  act  and  some  features  of 
its  administration  are  impressive — in  marked  contrast  to 
the  British  health  insurance.  But  some  of  its  most  essen- 
tial practices,  hereinafter  referred  to,  are  offensive  to  la- 
bor. And  its  adoption  was  due  to  the  same  political  in- 
fluences as  the  health  insurance,  the  majority  of  technical 
experts  favoring  a  voluntary  system  (cf.  Lasker,  **  Eco- 
nomic World, ' '  January  6, 1917 ) . 

It  is  not  possible  in  brief  space  to  enter  into  the 
details  of  this  social  experiment,  and  therefore  only  a  few 
important  points  will  be  noted. 

(1)  Under  this  British  law  the  unemployment  benefit 
is  a  **flat  rate''  payment  of  lis.  (until  recently  7s.)  per 
week,  which  is  less  than  one-third  of  the  average  rate 
of  wages  in  the  trades  covered,  whereas  in  America  it  has 
been  proposed  that  we  should  insure  two-thirds  of  wages 
without  limit.  The  difference  in  effect,  in  the  way  of 
promoting  idleness,  between  insuring  a  bare  minimum  of 
existence  and  insuring  two-thirds  of  usual  wages  or  aver- 
age earnings  would  undoubtedly  be  very  great.  That 
difference  should  not  be  disregarded  in  judging  the  prac- 
ticability and  expediency  of  proposals  to  insure  the 
higher  rate  of  benefits. 

(2)  The  trades  covered  by  the  British  law  include 
none  that  are  especially  subject  to  unemployment,  but 
are  all  of  a  medium  grade  in  that  respect.  Such  occupa- 
tions as  common  day-laborers,  longshoremen,  miners, 
textile  mill  operatives,  garment  workers  and  shophands 
are  not  covered.  A  bill  is  now  pending  to  extend  the  law 
to  cover  nearly  all  trades  and  occupations  including  those 
in  which  employment  is  most  irregular  or  uncertain  and 
unemployment  most  serious;  but  farm  labor  is  covered 
neither  in  the  present  law  nor  in  the  proposed  extension. 
This  omission  lays  the  scheme  open  to  criticism  for  mis- 
direction of  effort,  since  in  Great  Britain,  as  in  America, 
agriculture  stands  in  greater  need  of  labor  than  any  other 


132 

industry  and  consequently  there  is  greater  need  to  assist 
agricultural  labor  than  any  other. 

A  serious  difficulty  in  the  way  of  the  proposed  exten- 
sion of  the  scope  of  the  law  deserves  to  be  noted  in  this 
connection.  At  present  the  rate  of  contributions  is  equal 
for  all,  regardless  of  differences  in  risks.  This  feature 
has  excited  no  material  dissatisfaction,  because  the  risks 
of  unemployment  are  about  equal  in  all  the  trades  now 
covered.  But  when  it  comes  to  applying  the  law  also  to 
the  more  regular  cmplo>Tnents,  on  the  one  hand,  and  the 
the  more  irregular  employments,  on  the  other  hand,  ad- 
herence  to  that  convenient  rule  of  equality  must  cause 
great  dissatisfaction  in  the  more  regular  employments, 
which  would  be  overtaxed  to  help  the  workmen  in  other 
trades,  whereas  a  departure  from  the  rule  of  equality  in 
contributions  in  the  direction  of  differentiating  them  in 
proportion  to  risks  would  complicate  administration  ex- 
ceedingly; (cf.  ''Unemployment  Insurance, '^  by  Sir  Cyril 
Jackson,  ''Fortnightly  Review, '»  February  and  March 
1920). 

(3)  The  compulsory  insuring  of  2,300,000  persons  un- 
der the  British  act  has  not  meant  an  increase  of  that  many 
in  the  number  of  persons  insured  against  unemployment. 
Voluntary  insurance  of  out-of-work  benefits  was  already 
quite  prevalent  in  the  trades  covered  by  this  law  before 
it  took  effect,  according  to  official  estimates  about  500,000 
persons  employed  in  such  trades  being  already  well  in- 
sured. 

(4)  The  basic  machinery  for  the  administration  of  the 
unemployment  insurance  in  Great  Britain  is  a  system  of 
labor  exchanges  (government  employment  offices)  com- 
pletely covering  the  country.  It  is  contended,  on  the  one 
hand,  that  not  only  are  such  exchanges  very  useful  in 
themselves  in  reducing  unemployment,  but  also  that  their 
efficiency  has  been  greatly  improved  by  co-ordination  with 
the  unemployment  insurance  (Lasker,  '*  Economic 
World,"  Jan.  13,  1917).    On  the  other  hand,  however,  it 


133 

is  certain  that  the  insurance  would  be  impracticable  with- 
out the  labor  exchanges,  and  that  the  two  together  entail 
an  immense  increase  in  bureaucracy.  In  Great  Britain 
they  provide  places  for  about  4,000  public  office-holders, 
and,  on  the  same  scale,  would  call  for  10,000  in  the  United 
States  or  1,000  in  New  York  State  alone.  And  the  Labor 
Exchanges  are  quite  commonly  criticized  in  England  for 
being  efficient  only  in  providing  jobs  for  their  own  func- 
tionaries, the  work  they  claim  the  credit  for  being  per- 
formed largely  or  principally  by  trade  union  and  em- 
ployers' employment  agencies. 

(5)  One  of  the  purposes  of  the  British  unemployment 
insurance  is  to  reduce  unemployment  by  bringing  about 
a  greater  regularization  of  employment.  For  that  pur- 
pose the  law  penalizes  brief  casual  employments  by  rela- 
tively higher  contributions  (Eighth  Schedule),  allows 
rebates  on  their  contributions  to  those  employers  whose 
work  is  most  regular  (§94),  provides  for  a  return  of  con- 
tributions with  interest,  in  old  age,  to  those  employees 
who  have  little  recourse  to  the  benefits  (§95),  and  permits 
of  refunds  to  those  employers  who  work  "short  time"  in 
slack  seasons  instead  of  shutting  down  (§96).  (As  to 
these  provisions  see  Lasker,  "Economic  World,"  Janu- 
ary 13,  20,  1917.)  The  administrative  authorities  are 
striving  in  every  way  to  make  the  law  effective  for  regu- 
larizing employment;  but  there  are  many  difficulties  in 
the  way,  and  as  yet  entirely  too  little  has  been  accom- 
plished to  merit  more  than  respectful  notice. 

(6)  On  the  financial  side  the  income  has  largely  ex- 
ceeded the  outgo,  leaving  a  tremendous  surplus  for  peri- 
ods of  depression.  But  unemployment  has  been  abnor- 
mally low  in  all  the  trades  covered  ever  since  the  law 
took  effect,  except  for  a  very  short  period  just  after  the 
outbreak  of  the  war,  and  therefore  the  experiment  can- 
not yet  be  deemed  to  have  passed  its  financial  test.  And 
the  contributing  workers  are  discontented  both  with  the 
high  expenses  of  administration  and  with  the  size  of  the 


H 


tn 


•If 


134 

reserve,  which  latter  they  regard  as  an  unnecessarily 
large  accumulation  of  their  money  for  ulterior  and  unde- 
fined purposes.  The  unemployment  fund  account  for  the 
fiscal  year  1917-18,  issued  March,  1920,  shows  receipts 
and  expenses  as  follows : 

Receipts  : 

From  employers  and  workmen £3,277  123 

From  the  Government ...*.'.*.  1,007,541 

From  interest  on  investments ..*.'.'.*  '499'563 

From  other  sources 9  846 

^^^^^   £4,794,073 

Out  of  these  large  receipts,  £117,034  were  refunded 
to  employers  under  special  provisions  of  the  law,  above 
referred  to,  £436,151  were  paid  for  salaries  and  other 
expenses,  and  only  £86,159  were  paid  in  out  of  work  bene- 
fits, the  huge  balance  going  to  swell  the  surplus.    In  other 
words,  out  of  over  $20,000,000  taken  from  employers, 
workers  and  taxpayers,  the  unemployed  got  only  $430,000, 
whereas  the  office  holders  and  their  expenses  took  over 
five  times  as  much  or  about  $2,180,000.    In  1916-17  the 
results  were  similar— benefits  paid  amounted  to  only 
£34,312,  as  against  £329,466  paid  for  administration.   And 
with  all  this  expense  and  machinery  for  unemployment 
insurance,  it  was  found  necessary,  after  the  armistice, 
to  supplement  it  by  a  system  of  free  '*  doles  ^'  to  the  de- 
mobilized civil  and  military  service  wage-workers  and 
other  out-of-works,  at  further  expense  to  the  taxpayers. 
(7)  One  of  the  worst  phases  of  unemployment  does 
not  arise  out  of  the  irregularity  of  work  prevailing  in 
certain  trades,  insured  against  by  this  act,  but  is  the  risk 
to  which  every  wage-worker  is  subject  that  the  particu- 
lar industry  in  which  he  is  employed  may  shut  down  or 
reduce  its  forces  throughout  a  lengthy  period  of  depres- 
sion ;  that  the  trade  process  in  which  he  is  trained  may  be 
discarded ;  that  the  special  position  to  which  he  has  be- 
come fitted  by  experience  may  be  lost,  etc.,  such  misfor- 
tunes entailing  long  unemployment  and  possibly  migra- 
tion, change  of  trade,  new  apprenticeship,  etc.    This  risk 


^ 


<,  <^- 


135 

the  British  law  does  not  cover,  since  it  seldom  pro- 
vides travel  money  and  limits  benefits  to  fifteen  weeks 
in  any  one  year,  no  matter  how  long  and  uninter- 
ruptedly the  insured  person  may  have  contributed. 
Some  such  limitation  upon  the  duration  of  the  bene- 
fits is  necessitated  by  the  nature  of  the  insurance 
provided.  For  this  law  does  not  insure  merely  against 
unemployment  but  also  against  forced  change  of  oc- 
cupation or  grade  and  against  reduction  of  wages,  the 
insured  person  being  entitled  to  draw  the  benefits  while 
refusing  all  offers  of  work  either  at  reduced  wages,  or 
under  inferior  working  conditions  or  in  other  than  his 
last  regular  occupation.  Such  an  insurance  against  any 
undesired  change  or  retrogression  from  the  status  quo  as 
to  work,  wages  or  working  conditions  is  of  course  very 
valuable  to  the  class  who  possess  it,  because  it  maintains 
the  labor  standards  by  preventing  underbidding  by  the 
inferior  workmen  who  are  the  first  to  be  discharged  in 
slack  seasons;  but  the  duration  of  the  benefits  must  be 
short  or  the  insurance  would  seriously  subsidize  idle- 
ness. Consequently,  it  seems,  not  only  does  this  law  not 
cover  the  particular  phase  of  unemployment  just  de- 
scribed but  also  that  the  insurance  provided  is  upon 
terms  and  conditions  not  suitable  to  be  extended  to  cover 
it. 

(8)  The  British  experience -shows  that  unemployment 
does  not  occur  at  all  evenly  and  by  chance  among  the  in- 
sured wage-workers  generally,  but  that  it  is  to  a  high  de- 
gree concentrated  and  recurrent  among  a  small  propor- 
tion at  the  foot  of  the  scale  in  efficiency  and  industrious- 
ness  (cf.  **  First  Report  of  the  Proceedings  of  the  Board 
of  Trade  under  Part  II  of  the  National  Insurance  Act, 
1911,''  Cd.  6965,  pp.  26-27).  Consequently  one  effect  or 
tendency  of  the  insurance  is  to  encourage  the  misfits  to 
hang  on  as  ''casuals''  in  the  insured  trades.  And,  those 
trades  being  all  manufacturing  trades,  an  effect  of  the 
state's  contribution  to  the  insurance  is  to  subsidize  the 


k 


136 

drift  of  the  population  toward  factory  wbrk  and  into  man- 
uiacturmg  centers. 

This  phase  of  the  problem  is  recognized  by  European 
students  of  unemployment  insurance  to  be  a  serious  one. 
As  late  as  1914,  Herr  Delbriick,  explaining  in  the  Reichs- 
tag the  German  Government's  objection  to  undertaking 
unemployment  insurance,  said : 

sidered  fit'  Is  irto  L  rennir»/„f  »  ^l  l^  *  P^"""""  '»  ^e  con- 
he  must  at  :!led'  'a''cXrSym/n'^  ra°'rcr,^°;eT?Xd%1 
proportions  of  unemployment  arp  (^TfrJrv^ti,  •  ilf^  ^^°  ^^® 

lacks  hands,  whereas^Kdustrles  have  too  ™ny^^^       Agriculture 

(9)  The  practices  essential  or  deemed  essential  to  this 
form  of  msurance  are  in  many  ways  offensive  to  self- 
respe^tmg  workmen  and  subversive  of  the  independence 
of    abor.    To  qualify  for  unemployment  insurance  the 
Bntish  wage-worker  must  carry  an  unemployment  card. 
While  drawing  benefit  he  must  sign  an  out-of-work  regis- 
try book  (with  some  few  exceptions)  daily  at  a  govern- 
ment labor  exchange.    If  after  signing,  he  obtains  work 
on  any  day  up  to  midnight,  he  must  immediately  report 
the  fact.    A  clerk  of  the  labor  exchange  keeps  the  out-of- 
work  registry  book,  entering  in  it  the  total  number  of 
days  of  a  workman's  non-employment,  his  days  on  bene- 
fit, the  number  of  days  he  signs,  the  number  he  fails  to 
sign  the  day  when  his  benefit  is  exhausted,  and  the  fact 
whether  his  loss  of  work  is  due  to  a  trade  dispute,  sick- 
ness or  other  cause.    There  are  also  compiled  and  kept 
m  the  labor  exchanges  records  of  all  applicants  for  un- 
employjnent  benefits.    There  is  a  code  for  registratio^, 

looks    of  he  applicant;  his  clothes;  cleanliness;  height: 

Xlf^l  Tk*'  '^T^'  ^^""°^-     T^«  ^PPl-a°t  mus 
give  to  the  labor  exchange  oflScial  the  name  and  address 

of  his  last  employer,  to  whom  the  exchange  mails  a  notice 

Sther^tb  ^^^^^''^P^^-  opportunity,  first,  to  disclose 
whether  the  apphcant  is  out  of  work  through  any  cause 
disqualifying  for  benefit,  and,  second,  to  make  any  com! 


k 


137 

munication  he  desires  about  the  workman  either  to  the 
exchange  or  to  the  next  employer.  On  being  engaged 
the  worker  deposits  his  unemployment  insurance  card 
with  his  employer.  The  latter  h,olds  it  throughout  the  em- 
ployment. The  insurance  dues  are  deducted  from  the 
worker 's  wages  on  pay  day.  The  insurance  accounts  with 
the  government  are  kept  in  the  employer's  books.  Union 
men  who  have  been  on  strike  or  locked  out  can  be  identi- 
fied by  their  insurance  cards.  All  the  insured  and  much 
of  their  life  history,  together  with  crude  estimates  of 
their  character  formed  by  government  underlings,  are 
listed  and  recorded  for  such  uses  and  purposes  as  the 
public  officials  may  choose. 

Disputes  over  qualifications  for  unemployment  bene- 
fits are  numerous,  to  decide  which  gives  employment  to  a 
number  of  public  officials,  whose  decisions  of  fine  points 
already  fill  three  or  four  large  volumes  of  official  reports. 

(10)  The  excessive  red-tape  and  vexations  uselessly 
imposed  for  the  mere  sake  of  bureaucratic  uniformity 
entailed  by  this  plan,  are  also  to  be  considered.  Solicit- 
ors, stockbrokers,  bank  clerks,  civil  servants  and  others, 
who  volunteered  for  Sunday  work  at  Woolwich  and  other 
arsenals  during  the  war,  were  obliged  to  take  out  unem- 
ployment insurance  cards,  though  obviously  they  would 
never  draw  benefits.  The  Belgian  refugees  were  obliged 
to  do  the  same.  And  so  also  were  a  band  of  Canadian 
engineers  who  went  to  England  to  work  on  a  six  months' 
munition  contract,  although  work  and  wages  for  the  six 
months  were  guaranteed  by  the  government. 

From  the  foregoing  points  a  fair  idea  of  this  British 
social  experiment  may  be  gathered.  It  is  still  an  experi- 
ment, in  a  very  early  stage  of  experimentation,  and  re- 
stricted for  trial  to  a  limited  field  wherein  conditions  are 
most  favorable.  And  yet  this  experiment  is  the  only  prec- 
edent for  compulsory  unemployment  insurance,  even  the 
German  government,  with  its  strong  predilections  for 
paternalism,  having  positively  declined  to  venture  into 
this  dangerous  and  uncertain  field. 


II 


,1 
ii 


,1 1 


138 

Besides  compvlsory  unemployment  insurance  there 
are  in  operation  in  Europe  various  plans  of  voluntary  un- 
employment insurance,  principally  in  trade  union  funds, 
subsidized  by  the  state,  departments  or  municipalities. 
This  is  known  as  the  **  Ghent  plan'\    It  prevails  in  Den- 
mark and  Norway,  and  various  districts  or  towns  in 
France,  Belgium,   Switzerland  and   Germany,   and  has 
recently  been  adopted  in  Holland.    For  an  account  of  the 
Ghent  and  other  early  plans  of  unemployment  insurance 
see  I.  G.  Gibbon,  '* Unemployment  Insurance, '^   (King, 
London,  1911);  Schloss,  **  Insurance  against  Unemploy- 
ment,^' (London,  1911);  Cyril  Jackson,  ^  *  Unemployment 
and  Trade  Unions,^'  (London) ;  Paul  Dupont,  ''L'Assur- 
ance  Contre  le  Chomage/'  (Girard  &  Briere,  Paris,  1908) 
and  **24th  Annual  Eeport  of  the  Commissioner  of  Labor, 
1909. '^    This  system  is  criticised  on  the  ground  that  it 
helps  more  particularly  those  among  the  working  people 
who  are  best  able  to  help  themselves,  leaving  unassisted 
those  very  classes  who  suffer  most  from  unemployment. 
But,  as  has  already  been  shown,  compulsory  unemploy- 
ment insurance  is  open  to  this  very  same  objection— 
though  to  a  less  extent — first,  because  the  less  regularly 
employed  among  the  insured  are  often  *'out  of  benefit'', 
and,  second,  because,  up  to  date  at  least,  it  has  not  been 
shown  to  be  practicable  to  apply  it  to  those  trades  and 
occupations  in  which  unemployment  is  most  prevalent, 
and  in  which,  consequently,  relief  is  most  needed. 

After  a  thorough  study  of  the  subject  of  unemploy- 
ment insurance.  Gibbon,  in  his  standard  treatise  on  the 
subject,  cited  above,  comes  to  the  following  conclusions : 

"The  state  and  local  authorities  should  encourage  insurance 
against  unemployment;  insurance  could  thus  be  much  extended 

"Insurance  is  best  effected  through  voluntary  associations  (in 
practice  generally  trade  unions)  which  are  managed  by  the  insured 
themselves;  and  insurance  in  this  form  should  be  fostered  as  much 
as  possible. 

"Side  by  side  with  insurance  effected  through  such  associations 
the  state  should  provide  means  of  insurance  for  those  not  otherwise 
insured. 

"Insured  persons  should  be  given  preference  at  labor  exchanges 
If  as  qualified  as  other  applicants,  in  the  giving  of  public  and  in 
so  far  as  employers  acquiesce,  of  private  employment 


139 

"It  is  not  expedient,  on  the  whole,  that  insurance  should  be  made 
compulsory. 

"Nor  does  it  seem  advisable,  at  least  when  the  insurance  is  volun- 
tary, that  compulsory  contributions  should  be  required  from  em- 
ployers." 

Among  all  the  branches  of  social  insurance,  the  volun- 
tary system  against  unemployment  embodies  the  most 
immediate  promise  to  trade  unionists.  It  certainly 
touches  intimately  the  wage-worker's  pressing  interests. 
This,  in  various  ways.  The  trade  unions  already  operate 
an  unemployment  relief  system  through  their  own  estab- 
lished administration ;  they  have  no  connection  with  state, 
municipal  or  other  political  authority;  they  avoid  all 
taint  of  bureaucracy,  since  they  ask  for  no  new  office 
holders ;  they  permit  no  new  form  of  interference  with  the 
individual  workmen  by  employer  or  inspector ;  they  incur 
no  actuarial  difficulties;  they  adopt  methods  suitable  to 
their  trade  customs,  each  organization  profiting  by  its 
special  experience;  they  naturally  differentiate  between 
the  needs  of  seasonal  and  all-the-year-round  trades. 
Trade  unions  can  devise  facilities  for  transferring  the 
surplus  of  their  membership  in  one  city  to  another  need- 
ing them  and  even  to  other  occupations,  and  when  neces- 
sary can  employ  effective  means  for  restricting  the  num- 
ber entering  their  ranks.  Their  committee-men  detect 
the  **work  shy"  and  know  who  are  the  steady  failures 
and  why.  The  general  membership  is  set  to  thinking  on 
the  individual  as  well  as  the  social  factors  in  unemploy- 
ment when  they  find  that  12  per  cent  of  the  union  is 
drawing  35  per  cent  of  the  out-of-work  benefits,  as  has 
been  the  case  in  a  London  trade  union.  In  these  facts 
are  indicated  numerous  points  of  superiority  in  a  trade 
union  administration  of  unemployment  benefits  over  that 
of  a  government  bureau. 

A  test  of  the  attitude  of  the  public  toward  a  form  of 
social  insurance  possessing  such  merits,  untainted  by 
politics  or  perversions — such  as  social  workers '  job  seek- 
ing— could  be  had  by  advancing  voluntary  unemployment 
insurance  to  a  prominent  place  in  the  social  insurance  pro- 


J 'I 


I 


140 

gram  in  America.  A  more  intensive  study  of  the  work- 
ings and  detailed  methods  of  this  plan  of  insurance  in 
Europe  would  then  be  in  order. 

The  trade  union  argument  for  this  proposition  is 
plain.  A  union  regularly  assists  its  out-of-works,  usually 
giving  each  a  certain  amount  weekly.  It  then  turns  to 
the  community  and,  tendering  as  an  exhibit  its  out-of- 
work  daily  registry  and  its  weekly  pay  book,  both  duly 
signed  by  the  unemployed  members,  it  makes  a  requisi- 
tion on  the  community  treasury  for  reimbursement  to  the 
union  funds  of  a  fixed  proportion  of  the  moneys  so  ex- 
pended—strike benefits  of  course  excluded.  In  Ghent, 
Belgium,  for  example,  in  1909,  the  number  of  unions  hav- 
ing this  arrangement  with  the  city  was  43,  with  a  member- 
ship of  18,500;  the  number  of  the  unemployed  who  drew 
benefits  was  9,271 ;  they  drew  for  81,265  days ;  the  union 
benefits  summed  up  $17,000;  the  city's  subsidy  to  the 
unions  was  $8,000.  Ghent 's  allowance  to  a  ^  ^  voluntary  as- 
sociation ' '  having  unemployment  benefits  is  50  per  cent  of 
the  amount  paid.  The  London  Compositors'  Association, 
with  12,000  members,  paid  its  out-of-works  in  1914  $120,- 
000.  It  drew,  as  a  voluntary  association,  under  the  unem- 
ployment insurance  act,  $20,000,  the  subsidy  in  England 
then  being  in  the  proportion  of  one  dollar  from  the  state 
to  every  six  dollars  given  by  the  union. 

The  trade  unions  see  a  step  toward  justice  in  this  act 
of  the  community  in  returning  to  a  voluntary  association 
a  part  of  the  latter 's  outlay  for  the  support  of  persons 
in  need.  For  decades  our  American  unions  have  been  di- 
recting the  attention  of  the  general  public  to  the  fact  that 
the  labor  organizations,  through  their  benefits,  were  bear- 
ing a  considerable  part  of  a  burden  that  otherwise  would 
fall  on  the  community  as  a  whole.  The  European  trade 
unions  have  secured  a  tangible  acknowledgment  for  this 
service.  In  paying  out  their  own  funds  to  the  unemployed, 
unions  relieve  a  community  from  what  the  more  radical 
believe  should  be  a  charge  upon  society  alone.  Unem- 
ployment, as  a  constant  factor,  is  in  part  a  fault  of  the 


141 

general  social  organization.  A  trade  union,  it  is  argued, 
in  protecting  its  members  from  the  results  of  this  fault, 
is  performing  a  duty  of  society.  Not  only  is  it  relieving 
poverty,  but  it  is  reducing  temptation  to  crime,  rendering 
good  habits  possible,  preserving  the  health  of  the  work- 
ers, and  by  these  means  promoting  the  general  welfare. 

Professor  L.  T.  Hobhouse,  in  his  preface  to  Gibbon's 
** Unemployment  Insurance,"  gave  this  as  his  opinion: 
**The  most  important  result  which  emerges  from  Mr.  Gib- 
bon's investigation  is  the  contrast  between  the  success 
of  the  Ghent  system  of  insurance  and  the  difficulties  and 
failures  that  have  beset  other  experiences.  One  of  the 
great  merits  of  this  system  is  that  it  dispenses  with  com- 
pulsion." 

In  the  Meyer  London  Bill  introduced  in  Congress  in 
1916,  for  the  appointment  of  a  Federal  Commission  to 
investigate  the  subject  of  social  insurance,  the  program 
indicated  was  for  the  United  States  to  insure  all  wage- 
workers  a  high  percentage  of  their  usual  wages  or  earn- 
ings whenever  and  so  long  as  out  of  work,  regardless  of 
cause.  This  measure  recalls  Louis  Blanc's  employment 
insurance  fiasco  in  Paris  following  the  Revolution  of  1848. 
It  goes  far  beyond  strict  unemployment  insurance,  and 
proposes  to  provide  the  cash  benefits  of  sickness,  mater- 
nity, invalidity,  old  age  and  unemployment  insurance — 
in  other  words,  to  cover  the  whole  field  of  social  insurance 
with  the  exception  of  survivors'  (life)  insurance.  That 
would  be  a  choking  mouthful  to  take  at  one  bite,  in  view 
of  the  fact  that  foreign  experience  shows  that  social  in- 
surance is  something  that  must  be  developed  gradually 
and  that  each  line  of  social  insurance  calls  for  its  own 
delicately  adjusted  special  methods  and  means.  To  rely 
upon  a  single  system  of  bureaucratic  insurance  as  a  rem- 
edy for  all  the  different  kinds  of  misfortune  above  enu- 
merated and  for  all  the  different  classes  of  the  wage- 
workers  would  be  as  impracticable  as  to  trust  to  one  pat- 
ent medicine  as  a  cure  for  all  diseases.    The  author  of  the 


--# 


ik 


142 

London  Bill,  however,  cannot  be  suspected  of  being  as 
foolish  as  that.  He  was  looking  to  complete  socialism  as 
the  remedy,  and  his  bill  was  designed  merely  as  a  step 
toward  that  goal.  Social  insurance  consistent  with  the 
present  political  and  economic  organization  of  society 
must  be  developed  along  other  lines.* 

P.  Tecumseh  Sherman. 


♦  Subsequent  to  the  date  of  this  report,  the  British  scheme  of  unem- 
ployment insurance  has  been  revised  and  extended  by  the  Unemploy- 
ment Insurance  Act  of  August  9,  1920.  For  a  summary  of  the  provisions 
of  that  act  and  of  the  principal  objections  of  organized  labor  thereto,  see 
Monthly  Labor  Review,"  September,  1920,  pp.  165-169. 


THE  PROPOSED  SWEDISH  SICKNESS 
INSURANCE  SYSTEM. 

The  Swedish  Government  has  lately  made  public  the 
reports  of  a  Committee  appointed  to  inquire  into  the  ad- 
visability of  adopting  a  system  of  compulsory  insurance 
for  the  Kingdom  of  Sweden  more  or  less  after  the  Ger- 
man method.  Besides  submitting  a  draft  of  a  law  the 
Committee  has  also  issued  a  fairly  detailed  summary 
of  the  underlying  considerations  in  the  introductory  por- 
tion of  which  emphasis  is  laid  upon  the  fact  that  social 
insurance  in  the  strict  sense  of  the  term  must  include 
all  classes  of  the  population  and  not  the  manual  labor 
element  alone.  The  report,  for  illustration,  emphasizes 
the  viewpoint  that  **  besides  the  wage-earners,  there  are 
a  number  of  other  occupations  whose  weak  and  unprotect- 
ed social  position  requires  in  a  high  degree  the  protec- 
tion and  support  which  society  alone  can  provide. ' '  The 
reference,  of  course,  is  largely  to  the  small  trade  class, 
or  those  who  carry  on  a  small  business  at  their  own  risk 
and  in  their  own  way,  but  who  yet  are  constantly  near 
to  the  poverty  line  or  the  risk  of  social  dependence  and 
the  poor  house.* 

After  pointing  out  that  sickness  insurance  in  particu- 
lar has  heretofore  in  Sweden  been  entirely  on  a  voluntary 
basis,  the  results  are  considered  inadequate  and  it  is 
therefore  proposed  to  establish  a  compulsory  system. 
The  two  methods  having  been  contrasted  the  preference 
is  given  to  the  compulsory  system  as  accomplishing  more 
lasting  and  more  important  results  within  a  shorter 
period  of  time.  The  argument  is  sustained  by  an  appeal 
to  the  fact  that  many  are  now  seeking  protection  by 

*  The  proposed  Swedish  legislation  excludes  persons  with  an  annual 
income  greater  than  5,400  kroner,  persons  holding  property  of  more 
than  15,000  kroner  value,  ministers  of  the  State  church,  school  teachers, 
civil  service  employees,  and  members  of  the  army  and  navy  personnel. 
Most  of  such  Government  employees  are  provided  for  through  special 
pension  legislation. 

143 


II  I     I         ^  ^it^— Mlf 


144 

means  of  voluntary  insurance,  but  that  such  insurance 
does  not  extend  to  the  whole  population.  The  arguments 
advanced  cannot  be  considered  convincing,  and  obviously 
no  effort  was  made  to  subject  the  German  experience  to 
reaUy  critical  consideration,  for  while  it  is  implied  at  least 
that  far-reaching  benefits  would  result  to  the  poor,  all  the 
German  and  British  evidence  is  opposed  to  the  theory 
that  the  poorest  poor  can  be  effectively  reached  by  any 
system  of  compulsory  insurance,  however  liberally 
framed,  as  a  substitute  for  a  poor  law. 

The  case  of  Denmark  is  advanced  as  perhaps  the  most 
conclusive  evidence  in  favor  of  the  voluntary  system, 
since  in  that  country  voluntary  methods  have  probably 
assumed  larger  proportions  than  anywhere  else.     But 
it  is  said  that  social  and  economic  conditions  in  Denmark 
as  well  as  geographical  and  other  considerations  go  far 
to  provide  an  environment  more  suitable  to  the  volun- 
tary system,  which  would  not,  it  is  said,  apply  with  equal 
force  to  Sweden.    Arguments  are  advanced  in  this  con- 
nection that  the  strong  individualistic  character  of  the 
Danes  is  itself  a  strong  element  of  opposition  to  methods 
of  compulsion  and  coercion,  even  though  such  methods 
may  possibly  result  in  economic  advantage.    The  Dane, 
in  brief,  is  said  to  prefer  private  co-operation  to  State 
regulation,  and  attention  is  directed  to  the  astonishing 
development  of  practical  co-operation  in  Denmark,  either 
on  a  purely  individualistic  basis  or  as  subsidized  by  the 
Government. 

Regardless  of  all  the  favorable  conditions  referred  to, 
even  Denmark  has  not  attained  to  a  condition  where  it  can 
be  said  that  sickness  insurance  has  become  universal. 
The  number  of  insured  male  wage-earners  amounted  in 
1915  to  170,000  or  a  little  over  50%  of  the  total  wage- 
earning  population.  By  1917  this  number,  it  is  said,  had 
increased  to  nearly  one  milHon,  but  even  this  was'  still 
but  two-thirds  of  the  total  population  actually  more  or 
less  in  need  of  such  insurance.  The  two  figures  are  not 
contradictory,  in  that  the  former  refers  only  to  wage- 


■*> 


145 

earners  and  the  latter  to  the  population  at  large,  includ- 
ing women  and  children  and  other  dependents  of  wage- 
earners^  families. 

It  is  pointed  out  in  this  connection  that  while  Den- 
mark in  1917  had  about  one  million  insured  persons,  the 
corresponding  number  for  Sweden  was  only  about 
6^00,000,  although  the  population  was  nearly  twice  that  of 
the  Danish  Kingdom.  This,  it  is  argued,  *4s  one  of  the 
reasons  why  a  compulsory  system  would  seem  neces- 
sary.'' 

The  Committee  reviews  in  detail  the  present  systems 
in  force  in  various  countries,  and  while  the  review  is  ap- 
parently exact  as  regards  specific  provisions  of  law,  it 
fails  to  give  a  really  thorough  and  comprehensive  view 
of  the  actual  administration,  which  is  much  more  impor- 
tant than  statutory  requirements  alone.  It  is  precisely 
on  this  ground  that  all  American  observations  concerning 
the  British  system  fall  short  and  are  indicative  of  an 
almost  complete  ignorance  of  actual  administrative  pro- 
cedure. Yet  upon  the  basis  of  such  fragmentary  and 
superficially  considered  evidence  the  Committee  reaches 
the  important  conclusion  that  compulsory  insurance  is 
the  only  method  of  solving  the  whole  problem.  In  this 
respect  the  Committee  fails  to  direct  attention  to  the  im- 
portant fact  that  no  social  insurance  system  anywhere 
solves  the  problem  for  the  entire  population  more  or  less 
in  need  of  such  protection. 

Following  a  consideration  of  general  principles  the 
Committee  presents  a  plan  of  its  own,  briefly  outlined  as 
follows: 

1.  Compulsory  sickness  insurance  must  include  the 
larger  part  of  the  population  and  not  be  limited  to  a  spe- 
cial class,  such  as  wage-earners  or  laborers.  The  term 
*'the  larger  part  of  the  population,''  however,  is  prob- 
ably meant  to  be  restricted,  as  in  England,  to  those  who 
receive  incomes  below  a  certain  figure,  or  who  othermse 
are  identified  as  persons  whose  economic  condition  falls 
below  the  higher  standard  of  a  well-to-do  and  prosperous 


!  : 


ss 


II 


I! 


146 

element.  All  such  persons  as  are  included  must  be  16 
years  of  age  or  over,  and  the  protection  is  to  extend  to 
members  of  the  families  of  the  insured,  and  not,  as  in 
J^ngland,  to  be  limited  only  to  the  wage-earner  himself. 

2.  The  entire  cost  of  the  insurance,  unless  otherwise 
provided  for,  is  to  be  paid  for  by  the  insured,  plus  a  grant 
from  the  State.  Employers  are  to  pay  contributions  only 
in  the  case  of  occupations  involving  some  extra  hazard 
above  the  normal,  or  occupations  clearly  identified  as 
being  health  injurious.  How  this  identification  is  to  be 
brought  about  is  not  clearly  intimated.  It  may  be  re- 
ferred to  as  one  more  evidence  of  the  theoretical  rather 
than  practical  consideration  of  the  whole  question. 

3.  For  health  insurance  purposes  the  country  is  to 
be  divided  into  various  districts,  each  of  which  is  to  have 
Its  own  Sickness  Fund.  These  Funds  are  to  be  governed 
m  a  very  democratic  manner,  on  the  principle  of  "Home 
Rule'';  but  they  are  subject  to  supervision  and  control 
by  a  Sickness  Insurance  Board,  which  is  to  be  the  gov- 
ermng  authority  in  local  matters,  it  being  the  intention  to 
have  the  entire  subject  brought  within  the  control  of  a 
General  Insurance  Department  for  the  entire  Kingdom. 

4.  The  benefits  are  to  be  cash  payments  during  sick- 
ness and  medical  attendance,  including  medicines,  for 
every  member  of  the  family.  Children  receive  only  medi- 
cal attendance  and  medicines,  but  of  course  no  cash  allow- 
ances. There  is  to  be  maternity  benefit,  including  medical 
attendance,  cash  payments  and  a  provision  for  nursing 
or  a  money  payment  in  lieu  thereof.  No  provision  is' 
made  for  funeral  benefits,  as  is  the  case  under  the  English 

The  Committee  is  of  the  opinion  that  the  family  of  the 
insured  worker  is  so  closely  related  to  his  physical  and 
social  well-being  as  a  worker  that  it  is  best  to  include  all 
dependents  within  the  provisions  of  the  scheme  By  thus 
going  outside  of  the  narrow  circle  of  wage-earners'  pro 
tection  m  its  restricted  sense  (limited  to  wage-earners 
with  incomes  of  less  than  5,400  Kr.  per  annum)  it  has 


147 


M 


been  considered  expedient  to  let  the  insured  (with  the 
help  of  the  State)  bear  the  whole  burden  of  the  insurance 
without  the  usual  assistance  of  the  employer;  for  it  was 
feared  that  if  this  course  were  not  adopted  employers 
might  discriminate  against  employees  with  large  fam- 
ilies liable  to  impose  a  heavier  charge  upon  the  Funds. 

The  population  which  will  benefit  by  this  insurance 
includes,  besides  general  wage-earners,  small  artisans  and 
small  industrial  owners,  also  small  merchants  and 
traders,  farmers,  clerks,  etc.  According  to  the  Swedish 
statistics  for  1915,  there  were  in  Sweden  72,000  indepen- 
dent artisans  managing  their  own  small  business  affairs 
or  trades,  and  who  employ  about  50,000  wage-earners, 
i.  e.,  50,000  casual  wage-earners  more  or  less  subject  to 
irregularity  of  employment.  The  report  points  out  that 
a  considerable  number  of  cases  exist  of  independent 
workers  who  are  not  much  better  placed  than  the  ordinary 
wage-earners  in  receipt  of  normal  but  continuous  wages. 
This  conclusion  seems  to  be  sustained  by  the  income  tax 
returns,  which  are  considered  reliable.  In  the  case  of 
owners  of  small  industries  and  tradesmen  of  the  poorer 
class,  the  1915  census  indicates  that  there  are  about 
40,000  of  these,  with  a  total  taxable  income  of  137  million 
Kroner,  or  an  average  income  of  about  3,500  Kroner. 
Economic  conditions  in  this  group  are  therefore  clearly 
not  much  better,  if  as  good,  as  those  observed  among  nor- 
mal wage-earners. 

The  report  considers  briefly  the  farming  population, 
it  being  stated  that  there  are  about  360,000  persons  em- 
ployed in  farming,  and  of  these  176,000  are  owners  of 
small  farms,  probably  from  7  to  15  acres.  In  addition, 
it  is  said  that  there  are  about  30,000  small  landholders, 
such  as  foresters,  truck  gardeners,  etc.,  so  that  there  are 
estimated  to  be  about  200,000  in  this  group  in  need  of 
social  insurance  protection  along  the  lines  proposed  by 
the  Committee. 

For  the  purpose  of  illustrating  the  probable  total  num- 
ber of  persons  likely  to  be  benefited  by  the  proposed  law 


':] 


r9' 


9«W*»^"^B^" 


""-  ^^*^- 


' 


148 

by  1922,  when  the  insurance  is  proposed  to  go  into  effect, 
the  Committee  presents  a  statistical  statement  or  hypo- 
thetical distribution  of  various  occupations,  ages  16  and 
over,  as  follows : 

Hypothetical    Distribution    of    Various    Occupations    Coming 
Under  Swedish  Act  in  the  Year  1922. 

Ages  16  and  Over 
Occupation  Males  Females 

Laborers  and  sailors 650,000  150,000 

Servants 100,000  150,000 

Foremen  and  general  service 100,000  50,000 

Total  wage-earners  850,000  350,000 

Independent  artisans,  tradesmen  and 

farm-owners 400,000  100,000 

Wives  without  occupation 700,000 

Other  members  of  family 200,000  400,000 

Total  non-wage-earners 600,000        1,200,000 

Sub-total 1,450,000        1,550,000 

Children  below  16  years 900,000  900,000 

Grand  total  2,350,000        2,450,000 

This  table  indicates  a  total  of  nearly  5  million  indi- 
viduals likely  to  be  provided  for  under  the  proposed  in- 
surance law.  In  proportion  to  the  total  estimated  popu- 
lation of  Sweden  for  1922,  this  is  equivalent  to  80%.  If 
these  percentages  are  applied  to  the  estimated  population 
of  the  United  States  for  1920,  of  110,000,000  the  num- 
ber which  would  require  to  be  provided  for  under  a 
similar  health  insurance  system  would  be  88,000,000  of 
the  total  population  or  about  58,000,000  of  the  population 
16  years  of  age  and  over. 

In  the  opinion  of  the  Committee  it  is  considered  ad- 
visable that  there  should  be  established  general  Sickness 
Funds  in  the  various  localities  instead  of  special  Trades 
Funds  or  Funds  of  Approved  Societies  with  their  mem- 
bership possibly  drawn  from  all  parts  of  the  country. 
The  proposal  apparently  clearly  intends  that  the  local 
experience  should  indicate  local  health  conditions  or  va- 
riations therefrom,  which  is  practically  out  of  the  ques- 
tion for  approved  societies  with  their  membership  not 
co-extensive  with  the  area  considered.     Sickness  Funds 


»* 


149 

are  proposed  to  contain  500  members,  except  in  sparsely 
settled  communities,  which  are  to  be  otherwise  provided 
for.  It  is  apparent  that  the  membership  is  to  be  non- 
selective or  in  other  words,  universal,  as  regards  per- 
sons otherwise  eligible  under  the  proposed  system.  It 
must  be  kept  in  mind  that  the  proposed  Swedish  plan  in- 
cludes others  besides  wage-earners,  in  the  restricted 
sense  of  the  term,  and  therefore  that  the  element  of  lo- 
cality is  obviously  more  important.  How  far  the  system 
differs  from  the  German  Communal  Sickness  Insurance 
Funds  is  not  clearly  indicated. 

Each  individual  Fund  is  to  have  a  Board  of  Directors 
of  5  members,  which,  according  to  the  Norwegian  experi- 
ence, seems  fully  sufficient  for  the  management  of  admin- 
istrative details.  In  this  respect,  however,  as  in  many 
others,  it  is  clear  that  the  Committee  does  not  represent 
actual  experience,  but  rather  theoretical  considerations 
arrived  at  only  from  careful  consideration  of  official  re- 
ports. 

Nor  is  it  clear  how  far  the  actual  sickness  administra- 
tion will  differ  in  actual  practice  from  the  corresponding 
systems  of  Germany,  Austria,  etc.  The  Danish  voluntary 
system,  for  illustration,  which  is,  apparently,  most  lib- 
eral in  this  respect,  excludes  only  a  few  well-defined  types 
of  illness  from  compensation  otherwise  than  cases  includ- 
ed under  the  workmen's  compensation  law.  The  Commit- 
tee is  strongly  of  the  opinion  that  it  is  better  to  lean  to- 
wards a  liberal  interpretation  of  the  Danish  law  than  to 
adopt  severe  restrictions  subject  to  extended  inquiries, 
as  is  the  case  in  Germany. 

Owing  to  the  fact  that  there  is  apparently  a  scarcity 
of  physicians  in  Sweden,  as  compared  with  England, 
Germany  and  Denmark  (for  Sweden  has  only  about  1,600 
physicians,  of  whom,  perhaps,  but  1,200  would  be  avail- 
able for  compulsory  insurance),  it  is  a  foregone  conclu- 
sion that  under  the  Swedish  system  physicians  would 
practically  be  employed  for  the  whole  of  their  available 


i.ii  I  LJWl^ 


J      ■    i 


I 


i 


150 

time,  with  little  opportunity  for  private  practice.    It  is 
difficult  to  understand,  under  the  circumstances,  why  a 
Public  Medical  Service  was  not  adopted  in  place  of  the 
proposed  complex  and  involved  form  of  State  Medical 
Administration.     The  Committee  realizes  that  the  right 
to  free  medicines  and  drugs  may,  in  many  cases,  lead  to 
serious  abuses,  but  is  nevertheless  of  the  opinion  that 
such  medicmes  or  drugs  should  be  included  in  the  system 
without  additional  expense  to  the  insured.    The  Commit- 
tee  is  also  of  the  opinion  that  the  freedom  of  choice  of 
physicians  should  not  be  abridged;  but  it  is  opposed  to 
rigid  rules  governing  the  relation  of  the  Fund  to  the 
physicians  in  a  manner  closely  bordering  on  a  system  of 
Public  Medicine.    The  real  viewpoint  is  obscured  by  an 
apparent  mdifference  to  the  actual  experience  which  has 
been  had  in  England  and  which  proves  conclusively  that 
the  population,  on  the  whole,  makes  practically  no  use 
of  the  freedom  of  choice"  in  the  selection  of  physicians 
but  IS  just  as  well  satisfied  with  one  good  physician  as' 
with  another. 

Sickness  insurance  benefits  are  payable  only  to  per-" 
sons  16  years  of  age  and  over.    The  sick  pay  is  to  be  rep- 
resented  by   two-thirds    of  the   daily  wages,   upon   an 
annual  basis  of  360  days,  including  wages  earned  on 
t^undays,  hohdays  or  overtime.    Sickness  pay  will  prob- 
ably be  payable  after  the  English  method  in  the  form  of 
a  reduced  amount  after  a  specified  period,  but  the  reports 
are  not  quite  clear  on  this  point,  which  is  probably  sub- 
ject to  further  consideration.  Maternity  insurance  covers 
the  entire  needs  of  pregnancy  and  special  emphasis  is 
placed  upon  the  urgency  of  proper  nursing  and  attend- 
ance, although  married  women  depending  upon  their  hus- 
bands for  support  are  not  to  receive  money  for  nursing 
service. 

As  regards  the  cost  of  the  proposed  medical  service 
and  provision  for  free  medicines,  the  report  contains 
some  interesting  information.    The  report  quotes  the  ex- 


151 


I 


perience  of  the  Christiania  sickness  Fund  of  Norway 
for  1915,  according  to  which  the  average  expense  per 
member  per  annum  for  medical  service  and  medicines 
was  8.60  Kr.  Of  this  amount  it  is  estimated  that  0.56 
Kr.  represent  the  cost  of  an  adequate  dental  service.  As 
said  before,  the  proposed  medical  benefit  is  to  be  inclu- 
sive of  all  the  medical  needs  of  the  insured,  and  not  lim- 
ited to  services  under  a  system  of  superficial  general 
practice  as  is  the  case  in  England.  The  average  sickness 
expense  for  Norway  for  the  year  1917  is  said  to  have 
been  nearly  10  Kr.,  but  it  is  not  quite  clear  what  medical 
benefits  are  included  or  excluded  under  the  Norway  plan. 
In  Denmark  under  the  voluntary  system  the  expense  dur- 
ing 1917  was  on  an  average  per  member  per  annum 
5.56  Kr.,  or,  including  hospital  and  sanatorium  expenses, 
7.28  Kr.  Or,  considering  Copenhagen  alone,  the  expense 
was  7.21  Kr.,  indicating  that  a  normal  experience  is  now 
fairly  well  established.  It  may  be  recalled  in  this  con- 
nection, that  the  English  cost  of  medical  attendance  at 
the  present  time  is  about  7s.  6d.,  exclusive  of  elements 
not  readily  calculated.  The  proposed  method  of  remu- 
neration in  the  future  under  the  English  system  will  be 
lis.;  but  it  is  safe  to  say  that  if  all  the  elements  which 
might  properly  be  included  were  taken  into  account  the 
total  cost  would  be  nearer  15s.  per  member  per  annum 
than  the  amount  stated. 

There  is,  however,  no  comparison  possible  between 
the  English  system  and  the  proposed  Swedish  system, 
since  the  latter  includes  many  elements  and  items  not 
accounted  for  in  the  English  figures.  The  Swedish  sys- 
tem proposes  to  go  very  much  further,  or  in  other  words 
to  conform  more  closely  to  the  present  German  method 
which  in  every  respect  is  more  liberal  as  well  as  more 
effective.  The  Committee,  however,  is  of  the  opinion  that 
a  conservative  estimate  of  the  probable  cost  of  medical 
benefit  for  Sweden  would  be  8  Kr.  per  member  per 
annum.  This  amount,  however,  will  in  actual  experience 
probably  be  found  quite  insufficient. 


.r" 


^ 


' 


; 


152 

On  the  subject  of  drugs  and  medicines  it  is  stated  that 
according  to  German  experience  this  item  represented 
about  4  Kr.  per  member  per  annum.    In  Denmark  in  1917 
the  cost  was  only  2.30  Kr.  per  member  per  annum,  which 
would  indicate  that  under  the  voluntary  system  the  actual 
cost  is  decidedly  less.    In  Denmark,  however,  the  Funds 
meet  only  three-fourths  of  the  drug  expenses,  the  re- 
mainder being  paid  for  directly  by  the  insured.     This 
gives  an  element  of  control  and  self-interest  which  is 
obviously  of  much  importance.     The  total  cost  of  the 
medical  benefit  under  the  Danish  system  is  placed  at 
3.50  Kr.  per  member  per  annum,  but  owing  to  the  in- 
creased cost  of  drug  prices  the  Committee  is  of  the  opin- 
ion that  it  is  not  advisable  to  place  the  cost  of  drugs  at 
less  than  5.00  Kr.  per  member  per  annum. 

On  the  foregoing  basis,  however,  the  Committee  esti- 
mates that  the  total  cost  for  medical  service  and  medi- 
cines, the  term  being  construed  under  a  more  liberal 
sense  than  under  the  English  law,  will  amount  to  about 
39,000,000  Kr.  per  annum  for  3,000,000  insured  persons. 
This  estimate,  however,  is  merely  conjecture.    All  experi- 
ence has  shown  that  when  the  Government  adopts  the  per 
capita  payment  principle,  the  service  is  reduced  accord- 
ingly, if  necessary.    It  is  frankly  conceded  in  the  nego- 
tiations for  increased  medical  remuneration  in  England 
that  the  Government  can  obtain  the  kind  of  medical  ser- 
vice it  is  willing  to  pay  for.    But  this  applies  much  more 
in  the  case  of  drugs  and  appliances,  which  in  practice  in 
England  as  well  as  in  Germany  are  reduced  to  the  most 
economical  basis  and  the  practical  elimination  of  all  ex- 
pensive drugs,  although  of  superior  curative  value. 

Equally  unsatisfactory  are  the  fundamental  estimates 
as  to  the  cost  of  sickness  benefit  or  cash  payments  to  the 
insured.  The  Committee  assumes  an  average  duration 
of  sickness  for  male  members  at  9  days  per  annum  (or 
the  days  for  which  benefits  are  paid,  including  Sundays 
and  holidays) ;  for  female  members  the  average  assumed 


A 


153 

duration  of  sickness  is  9.7  days.  Evidently  the  Commit- 
tee has  relied  upon  the  data  of  the  so-called  German  ex- 
perience. All  such  estimates  are  pure  guesswork,  for 
true  experience  depends  entirely  upon  the  definitions 
adopted.  If  sickness  is  construed  in  a  restricted  sense 
and  supplemented  by  a  thoroughly  well-organized  sys- 
tem of  supervision  and  control,  including  sick  visitors, 
medical  referees,  etc.,  the  average  duration  of  sickness 
will  be  much  reduced.  It  also  depends  largely  upon  the 
question  of  the  initial  waiting  period.  If  sickness  bene- 
fits are  paid  from  the  first  day  of  illness  there  will  be 
less  liability  to  prolong  unimportant  ailments  to  six  or 
seven  days  to  secure  cash  benefits.  When  the  waiting 
period  is  seven  days,  many,  during  periods  of  scarcity 
of  employment  or  low  wages,  will  deliberately  prolong 
minor  ailments  into  sickness  of  extended  duration.  Re- 
gardless of  the  enormous  experience  with  Germany,  the 
material  has  never  been  reduced  to  workable  propor- 
tions, and  practically  all  that  is  published  and  said  on 
the  subject  is  perilously  near  to  pure  guesswork. 

The  foregoing  observations  must  not  be  construed  as 
an  argument  against  the  use  of  sickness  data  properly 
defined  and  strictly  comparable.  There  is  unquestion- 
ably a  law  of  sickness  as  there  is  a  law  of  mortality,  but 
the  latter  as  well  as  the  former,  is  subject  to  important 
variations,  due  to  the  fact  generally  overlooked,  that 
methods  of  prevention  may  materially  affect  the  experi- 
ence. 

The  average  amount  of  sickness  pay  or  benefit  is 
placed  at  2.25  Kr.  per  day,  including  Sundays  and  holi- 
days. This  amount,  considering  prevailing  wages  in  Swe- 
den, is  probably  as  insufficient  as  is  the  10s.  a  week  paid 
in  England.  On  the  other  hand,  the  Swedish  law  includes 
in  the  above  estimate  about  700,000  housewives  with  no 
outside  employment  and  whose  annual  remuneration  for 
work  performed  in  the  home  is  put  at  the  sum  of  270 
Kroner  per  annum,  or  0.75  Kroner  per  day,  of  which 


r*^ 


^fr-9^r^^g^r 


•wnwM 


h 


154 

only  two-thirds  is  paid  in  sickness  benefits.  In  Great 
Britain  normal  wages  are  now  rarely  less  than  £3  a  week 
in  satisfactory  employments,  and  often  much  more. 
Therefore  to  offer  10s.  a  week  in  illness,  when  the  wages 
amount  to  60s.,  and  possibly  much  more,  is  obviously 
to  deter  applicants  from  seeking  relief  in  the  initial 
stages  of  disease.  If  this  conclusion  is  applied  to  Swe- 
den, it  may  be  assumed  that  there  will  be  an  insistent  de- 
mand for  an  increase  in  the  rate  of  allowances,  just  as 
this  has  been  the  case  in  England,  where  under  the  new 
law  the  rates  will  be  raised  from  10s.  to  15s.  If,  how- 
ever, the  average  rate  of  2.25  Kr.  per  day  is  applied  to 
the  insurable  population  above  16  years  of  age,  the  total 
amount  to  be  raised  by  joint  contributions  for  this  pur- 
pose alone  will  reach  the  considerable  sum  of  61,000,000 
Kr.,  or  including  the  medical  service  and  medicines, 
100,000,000  Kr.  combined. 

The  cost  of  maternity  insurance  is  placed  by  the  Com- 
mittee at  11,000,000  Kr.  per  annum,  but  here  again  details 
are  wanting  as  to  how  this  amount  has  been  arrived  at. 
The  cost  of  maternity  insurance  is  naturally  affected  by 
the  birth-rate,  and  since  there  has  been  a  material  decline 
in  the  birth-rate  in  most  countries,  and  never  as  much 
so  as  since  the  outbreak  of  the  war,  the  experience  thus 
far  has  generally  been  more  favorable  than  was  expected. 
On  the  other  hand,  the  allowances  usually  granted  have 
been  very  much  increased,  and  in  England  the  proposal 
now  is  to  raise  the  allowance  from  30s.  in  the  event  of 
a  confinement  to  40s. ;  but  the  public  demand  is  for  a  mini- 
mum of  60s.,  with  a  reasonable  certainty  that  the  sug- 
gested increase  will  be  forthcoming  in  due  course  of  time. 
Including  the  11,000,000  Kr.  with  the  amounts  previously 
given,  the  combined  total  of  the  different  items  thus  far 
given  is  111,000,000  Kr. 

On  the  question  of  management  expenses,  the  Com- 
mittee secured  information  from  Norway  and  Denmark 
representing  actual  experience.    In  Norway  the  expenses 


155 


of  management  in  1915  were  placed  at  3  Kr.  per  capita 
per  annum  for  the  cities  and  2.25  Kr.  for  the  rural  dis- 
tricts. In  1918,  however,  on  account  of  the  influenza  epi- 
demic the  expense  rate  increased  to  4  Kr.  for  Chris- 
tiania.  The  data  are  neither  satisfactory  nor  conclu- 
sive. Experience  in  England,  which  is  much  more  defi- 
nite, proves  that  the  administration  allowances  on  a  per 
capita  basis  may  be  wholly  insufficient  for  some  groups 
and  much  more  than  sufficient  for  others.  There  is  the 
same  adaptation  to  a  definite  amount  available  as  is  the 
case  in  regard  to  medical  benefits.  This  adaptation  may 
be,  and  often  is,  at  the  sacrifice  of  efficiency  and  com- 
pleteness on  the  one  hand,  and  the  payment  of  minimum 
wages  to  employees  on  the  other.  The  agitation  in  Eng- 
land is  decidedly  for  a  material  increase  in  administra- 
tion allowances,  and  the  outlook  is  encouraging  that  this 
demand  will  be  granted.  It  may  be  said  without  fear  of 
contradiction  that  practically  the  whole  civil  service  staff 
employed  in  the  administration  of  the  Act,  outside  of  the 
higher  Government  officials  in  London,  is  lamentably 
underpaid. 

It  may  be  of  interest  in  this  connection  to  give  the 
experience  for  Denmark  which,  once  more,  under  the  vol- 
untary system  shows  more  favorable  results.  In  1917 
the  average  expense  per  member  per  annum  was  2.07  Kr. 
for  Copenhagen,  and  for  the  smaller  cities  1.53  Kr.,  while 
for  rural  districts  it  was  only  0.60  Kr.  For  the  whole 
country  the  average  expense  was  1.08  Kr.  per  member 
per  annum,  or  only  about  one-third  of  the  rate  for  Nor- 
way. This  comparison  of  the  compulsory  and  voluntary 
systems  is  most  illuminating,  just  as  conversely  the  sick- 
ness rate  has  invariably  been  less  in  Denmark  under  the 
voluntary  system  than  in  Germany  under  compulsion. 

The  Committee  adopted  as  a  compromise  an  expense 
rate  of  2.50  Kr.  per  member  per  annum.  For  three  mil- 
lion members  this  would  amount  to  7%  million  Kroner,  or 
about  6  to  7  per  cent  of  the  total  insurance  cost  as  meas- 
ured by  the  amount  raised  in  contributions.    The  corre- 


i 


4t^ 


ik 


\i 


\n 


156 

spoiidiiig  figures  for  Germany  for  1913  are  6  per  cent, 
and  for  Norway  for  1915  about  11  per  cent.  Little  reli- 
ance can  be  placed  upon  estimates  of  this  kind.  All  expe- 
rience proves  conclusively  that  they  are  generally  ex- 
ceeded. Government  expenses  in  connection  with  the 
administration  of  matters  more  within  the  province  of 
private  enterprise  are  never  comparable  with  the  corre- 
sponding expense  rate,  for  illustration,  of  insurance  cor- 
porations. Much  is  left  out  of  consideration  because  of 
the  diflt'erent  organizati/)n  of  the  Government,  which 
makes  a  strict  assignment  of  every  item  of  expense  to  a 
particular  fund  practically  impossible.  It  is  thus,  for 
illustration,  out  of  the  question  to  estimate  the  true  cost 
of  post  office  assistance,  w^hich,  nevertheless,  must  assume 
considerable  proportions.  Accepting,  however,  the  esti- 
mate presented,  the  following  summary  of  the  total  cost 
of  the  proposed  insurance  scheme  for  the  year  1922  is  as 
follows  : 

Estimated  Cost  of  Compulsory  Health  Insurance  for  Sweden. 

1.  Medical  service  and  drugs 39,000,000  Kr. 

2.  Cash  benefits 60,800,000  Kr. 

3.  Maternity  insurance   11,000,000  Kr, 

4.  Management  expenses 7,500,000  Kr. 

Total    118,300,000  Kr. 

As  regards  the  contributions  to  the  FSind  on  the  part 
of  the  State,  the  Committee  is  of  the  opinion  that  the 
general  rule  of  foreign  countries,  that  two-thirds  of  the 
expenses  should  be  paid  by  the  insured,  is  a  satisfactory 
solution  of  the  difficulty.  Since,  however,  the  foreign  leg- 
islation, chiefly  that  of  Germany,  has  reference  particu- 
larly to  w^age-eamers  whereas  the  proposed  Swedish 
legislation  affects  a  larger  proportion  of  the  population, , 
it  has  been  deemed  advisable  to  adopt  a  different  system. 
It  has  been  thought  proper  to  place  the  State  contribution 
at  Ys  of  the  total  expense,  while  the  other  %,  apart  from 
extra  occupational  hazards,  is  to  be  paid  by  the  insured. 
In  other  words,  and  as  previously  pointed  out,  the  em- 
ployer is  not  to  be  called  upon  to  meet  the  cost  of  the  pro- 


I- 


157 

» 

posed  sickness  insurance  scheme  further  than  in  cases  of 
clearly  differentiated  injurious  trades  or  occupations.  On 
the  basis  of  this  theoretical  assumption  it  is  assumed  that 
the  State  contribution  will  amount  to  37,500,000  Kr. 

The  distribution  of  the  various  cost  factors  per  annum 
is  outlined  in  the  following  table  in  which  different  in- 
comes are  differentiated  into  five  groups : 

Distribution  of  Cost  Factors  in  the  Proposed  Swedish  Com- 
pulsory Health  Insurance  Scheme. 

Kr.  Kr.  Kr.  Kr.  Kr. 

Yearly  income 270  540  1,215  1,890  5,400 

Daily  sick  pay 0.50  1.00  2.25  3.50  10.00 

Sick  pay  for  9  days 4.50  9.00  20.25  31.50  90.00 

Doctor  and  medicine 13.00  13.00  13.00  13.00  13.00 

Management  expense 2.50  2.50  2.50  2.50  2.50 

Maternity  aid 3.67  3.67  3.67  3.67  3.67 

Total  sum  23.67       28.17       39.42       50.67     109.17 

State  aid  12.50       12.50       12.50       12.50       12.50 

Payment  by  the  insured..  11.17      15.67      26.92      38.17      96.67 
%  of  annual  earnings 4.1  2.9  2.2  2.0  1.8 

This  is  an  interesting  table,  for  it  has  the  merit  of  a 
definite  outline  of  the  principles  upon  which  the  Commit- 
tee has  based  its  final  recommendations.  It  fails,  of 
course,  to  emphasize  clearly  the  contributions  to  be  made 
by  the  employer  in  the  case  of  occupations  w^here  the  sick- 
ness rate  would  exceed  the  normal.  Nor  is  a  method 
indicated  as  to  how  this  normal  is  to  be  determined.  In 
the  British  insurance  experience  it  has  been  found  practi- 
cally impossible  to  carry  into  effect  Section  63  of  the 
Law  of  1911,  under  which  the  excess  in- the  local  sickness 
experience  was  to  be  paid  for  in  part  by  the  local  author- 
ities, assumed  to  be  derelict  in  the  enforcement  of  sani- 
tary requirements.  It  is  provided  that  the  sickness  funds 
are  to  determine  the  extra  hazard  in  individual  cases  and 
employers  are  required  to  furnish  the  necessary  infor- 
mation as  to  the  nature  of  the  health  injurious  occupa- 
tions or  conditions.  All  this,  in  practice,  has  been  found 
absolutely  unworkable,  as  best  emphasized  by  Brend  in 
his  book  on  *' Health  and  the  State.''  Certainly  thus  far 
no  practical  results  have  been  achieved,  after  eight  years' 


M 


Wi 


I 


''I 


158 

experience  in  England,  with  probably  much  better  oppor- 
tunities  for  statistical  and  sanitary  research  than  else- 
where. 

The  remainder  of  the  report  considers  the  judicial 
aspects  of  the  proposed  organization,  questions  of  arbi- 
tration in  the  case  of  disputes,  etc.    Theory  in  this  matter 
IS  generally  opposed  to  the  facts  of  experience.    It  has 
been  clearly  shown  by  the  German  experience  that  if  the 
mterests  of  the  State,  the  insured  and  the  employer  are 
to  be  adequately  protected  a  truly  immense  separate 
judicial  organization  is  required.    This  results  in  a  vast 
amount  of  endless  Utigation  and  bureaucratic  inquiry, 
with  no  assurance  that  the  real  interests  of  the  insured 
are  materially  advanced.     The  report  fails  in  clearly 
realizing  the  many  administrative  difficulties  of  a  largely 
artificial  state  of  affairs  created  by  a  law  not  in  con- 
formity to  a  rational  social  and  economic  development 
but  enacted  in  response  to  visionary  theories  of  social 
reform.     Yet  it  goes  without  saying  that  the  Swedish 
Committee  probably  represents  as  high  an  order  of  offi- 
cial inteUigence  as  could  be  brought  to  bear  upon  the 
question    under    consideration.    But    so    long    as    the 
premises  as  such  are  false  and  misleading  the  results  can- 
not  possibly  be  satisfactory.     The  vice  inherent  in  all 
legislation  of  this  kind  is  ignorance  of  or  indifference 
to  the  fact  that  the  real  objective  of  the  proposed  legis- 
lation IS  an  insidious  modification  of  the  poor  law  or  the 
establishment  of  a  system  of  relief  in  the  disguise  of  in- 
surance.    Until  there  is  a  clearer  grasp  of  the  funda- 
mental truth  that  all  social  insurance,  so-called,  is  not  in- 
surance, m  the  strict  and  accepted  sense  of  the  term  no 
successful  solution  of  the  end  aimed  at  is  likely  to'  be 
forthcoming. 

Frederick  L.  Hoffman. 


APPENDIX  A. 

STATEMENT   BY   THE   COMMITTEE   ON   CON- 
STRUCTIVE   PLAN,    SOCIAL    INSURANCE 
DEPARTMENT,  THE  NATIONAL 
CIVIC  FEDERATION. 

To  the  Legislature  of  the  State  of  New  York: 

The  undersigned,  the  Committee  on  Constructive 
Plan  of  the  Social  Insurance  Department  of  The  National 
Civic  Federation,  has  given  careful  consideration  to  the 
bills  introduced  in  the  New  York  Legislature  in  the  years 
1916-1919,  commonly  known  as  the  Mills,  Nicoll,  and  Dav- 
enport-Donohue  bills.  Our  views  upon  the  arguments  ad- 
vanced by  the  proponents  of  this  type  of  legislation  have 
been  expressed  in  a  pamphlet  recently  issued  by  the  Com- 
mittee entitled  **A  Eefutation  of  False  Statements  in 
Propaganda  for  Compulsory  Health  Insurance.''  For 
this  reason  we  believe  it  inadvisable  at  this  time  to  enter 
into  any  further  discussion  of  this  phase  of  our  subject. 

We  desire,  however,  to  call  the  attention  of  the  Legis- 
lature to  a  lecture*  before  The  New  York  Academy  of 
Medicine  on  October  2,  1919,  by  Sir  Arthur  Newsholme, 
formerly  Chief  Medical  Officer  of  the  Local  Government 
Board  for  England.  Commenting  upon  the  British 
Health  Insurance  Act,  he  says :  ' '  The  act  in  its  present 
form  is  now  generally  condemned;  and  it  is  significant 
that  the  need  for  its  radical  re-organization  appears  to 
be  universally  accepted.  Two  medical  benefits  (medical 
and  sanatorium)  and  a  maternity  benefit  were  conferred 
under  the  act;  but,  as  they  have  been  administered,  it 
cannot  be  affirmed  that  any  marked  public  benefit  has  ac- 
crued ;  and  it  is  certain  that  if  the  same  amount  of  money 
had  been  placed  in  the  hands  of  the  public  health  authori- 

*  Published  in  *  *  The  Survey, ' '  January  3,  1920. 

159 


i^ 


^€(fW~" 


li: 


160 

ties  to  provide  adequate  medical  aid  to  those  needing  it, 
of  the  kind  most  lacking  and  which  they  could  least  afford 
to  obtain,  great  benefit  to  the  public  health  would  have 
been  secured." 

Eather  than  continue  the  discussion  of  legislation  for 
compulsory  health  insurance,  we  have  attempted  to  evolve 
a  Constructive  Plan  to  be  dealt  with  by  the  Legislature. 
It  is  our  unanimous  opinion  that  the  immediate  problem 
for  consideration  is  not  that  of  insurance  against  sick- 
ness, but  the  larger  and  more  important  problem  of  the 
extent  of  illness  and  the  methods  for  its  prevention.  AVe 
have  set  ourselves  to  this  task  and  desire  to  submit  the 
following  facts: 

At  present,  there  is  no  exact  information  as  to  the 
extent  of  illness.  It  is  clear,  from  studies  which  have 
been  made,  that  a  considerable  proportion  of  the  popu- 
lation does  not  receive  any  medical  care  whatever;  that 
others  are  unable  to  obtain  adequate  medical  treatment 
and  that  a  very  large  percentage  of  existing  sickness 
could  be  eliminated  if  proper  preventive  measures  were 
employed.  Large  sums  are  being  paid  annually  by  the 
different  states  for  the  maintenance  of  institutions  for 
the  treatment  of  disabilities  and  their  consequences,  due 
largely  to  neglect.  A  large  number  of  communities  are 
engaged  in  no  active  health  work  and  have  grossly  insuf- 
ficient appropriations  for  health  activities. 

Statistics  of  other  sickness  surveys  in  the  hands  of 
this  Committee  prove  beyond  doubt  that  a  large  per- 
centage of  disabling  illness  is  caused  by  communicable 
diseases.  There  is  competent  medical  authority  for  the 
belief  that  many  of  the  diseases  of  later  life  are  the  se- 
quelae of  infectious  diseases  contracted  in  childhood. 

The  subject  of  sickness  needs  to  be  considered  from 
the  following  aspects,  in  the  order  of  their  importance, 
namely : 

1.  Prevention. 

2.  Treatment  and  Care. 

3.  Replacement  of  Wage  Loss  from  Sickness. 


\ 


^\ 


K> 


161 

1.  Prevention,  This  is  largely  a  problem  of  the  edu- 
cation of  the  public  concerning  the  preservation  of  health 
and  the  prevention  of  disease.  The  care  and  treatment 
of  communicable  diseases  are  essentially  functions  of  the 
public  health  authorities,  since  one  individual  may  trans- 
mit infection  to  another  and  thereby  become  a  menace  to 
the  public  health.  Already  police  powers  are  given  to 
Health  Officers  to  remove,  even  forcibly  if  necessary  in 
the  interest  of  the  public  health,  and  to  treat  individuals 
suffering  from  these  diseases.  These  powers  affect  all 
the  people  alike,  regardless  of  their  ability  to  pay  for 
treatment.  The  time  has  come,  in  our  opinion,  when  the 
State  should  display  greater  activity  in  the  treatment  and 
care  of  all  communicable  affections— particularly  tuber- 
culosis and  venereal  diseases— similarly  from  the  stand- 
point of  public  health  protection,  rather  than  from  the 
standpoint  of  poor  relief.  More,  also,  ought  to  be  done 
to  educate  the  people  relative  to  public  and  personal 
hygiene.  Insurance,  on  the  other  hand,  is  not  to  be  con- 
sidered in  connection  with  this  branch  of  the  problem. 
The  prevention  of  illness  is  not  a  function  of  insurance. 

2.  Treatment  and  Care,  The  critical  fact,  in  our 
opinion,  is  that  a  large  proportion  of  the  people  do  not 
receive  adequate  medical  care  and  treatment.  How  to 
remedy  that  condition  is  a  problem  that  should  be  given 
exhaustive  study,  particularly  by  the  medical  profession, 
which  profession  should  be  called  upon  to  devise  a  sys- 
tem whereby  proper  medical  aid  may  be  brought  within 
the  reach  of  every  individual  in  the  State.  Only  by  thor- 
ough investigation  can  there  be  obtained  the  information 
necessary  to  enable  the  Legislature  to  take  such  action 
upon  this  subject  as  will  result  in  the  greatest  benefit  to 
the  public. 

3.  Replacement  of  Wage  Loss  from  Sickness.  This  is 
an  economic  loss ;  and,  consequently,  it  is  a  subject  appro- 
priate for  insurance.  But  we  are  convinced  that  the  in- 
formation at  the  disposal  of  the  Legislature  and  the 
People  is  as  yet  insufficient  for  the  successful  solution  of 


mxr^naiwHT. '.  7' 


tg(fy^ 


I     t 


(M 


It 


f  i 


1 


162 

this  problem;  and  that  the  precipitate  adoption  by  the 
Legislature  of  any  academic  plan  of  insurance  would, 
among  other  unfortunate  consequences,  defer  such  deter- 
mination for  years.  We  believe,  therefore,  that  em- 
ployers and  wage  workers  should  be  called  on  to  confer 
and  determine  how  best  to  meet  this  loss. 

In  any  event,  we  are  satisfied  that  sickness  prevention, 
treatment  and  care  constitute  by  far  the  most  important 
factors  upon  which  efforts  and  attention  should  be  con- 
centrated for  the  time  being,  and  that  only  after  we  have 
learned  more  about  the  extent  of  sickness,  its  causes,  and 
the  means  of  prevention,  will  it  be  appropriate  to  take  up 
the  question  of  how  to  relieve  its  economic  consequences. 

Investigation  Commission. 

Therefore,  we  respectfully  recommend  that  the  Legis- 
lature consider  the  appointment  of  a  Special  Commis- 
sion, competent  and  duly  empowered,  to  make  a  careful 
and  exhaustive  investigation  and  study  of  the  extent,  pre- 
vention and  treatment  of  sickness,  and  that  such  com- 
mission be  instructed  specifically  to  study  and  report 
upon  the  following  questions : 

1.  Methods  and  means  for  the  prevention  of  dis- 

ease. 

2.  Methods  and  means  for  the  education  of  the 

people    in    the    fundamental    principles    of 
health. 

3.  Methods  and  means  for  bringing  adequate  medi- 

cal care  within  reach  of  all. 

4.  The  establishment  of  diagnostic  clinics  through- 

out the  State. 

5.  The  establishment  of  clinics  or  other  facilities 

throughout  the  State  for  the  periodic  physi- 
cal examination  of  persons  applying  therefor. 

6.  The  further  development  of  public  health  nurs- 

ing throughout  the  State. 


163 

7.  Methods  and  means  for  the  adequate  care  of 

maternity  cases. 

8.  Co-ordination  of  public  and  private  health-pro- 

moting agencies. 

9.  The  determination  of  the  extent  of  dependency 

upon  public  or  charitable  relief  in  the  State 
and  of  the  extent  to  which  such  dependency 
is  due  to  illness. 

All  of  which  is  respectfully  submitted. 

De.  Alvah  H.  Doty,  Chairman. 

Medical  Director,  Western  Union  Telegraph 
Co.,  New  York. 

Mbs.  F.  Lothrop  Ames, 

Chairman  Industrial  Committee,  New  Eng- 
land Section,  Woman's  Department,  The 
National  Civic  Federation,  Boston,  Mass. 

Mes.  Saea  a.  Conboy, 

International  Secretary-Treasurer,  United 
Textile  Workers  of  America,  New  York. 

Mark  A.  Daly, 

Secretary,  Associated  Manufacturers  and 
Merchants  of  New  York  State,  Buffalo, 

N.  Y.        . 

Geetrudb  Beeks  Easley, 
Director,   Welfare   Department,    The   Na- 
tional Civic  Federation,  New  York. 

Dr.  Lee  K.  Feankeil, 

Third  Vice-President,  Metropolitan  Life  In- 
surance Company,  New  York. 

Hugh  Frayne, 
General  Organizer,  American  Federation  of 
Labor,  New  York. 

F.  L.  Hoffman,  LL.D., 

Third  Vice-President  and  Statistician,  Pru- 
dential Insurance  Company,  Newark,  N.  J. 

Dr.  Harris  A.  Houghton, 
Vice-President,    Associated    Physicians    of 
Long  Island,  New  York. 


r 


H 


— <gw"^— y^^-^F '  '  ,»|  ^ 


164 

Dr.  J.  Richard  Kevin, 
Chairman,  Legislative  Committee,  New  York 
State  Medical  Society,  Brooklyn. 

Hill  Montague, 
President  International  Fraternal  Congress 
of  America,  Richmond,  Va. 

P.  Tecumseh  Sherman, 
Attomey-at-Law,  New  York. 

J.  W.  Sullivan, 

Of  the  American  Federation  of  Labor,  Mem- 
ber International  Typographical  Union, 
Brooklyn. 

Mrs.  Coffin  Van  Rensselaer, 
Executive  Secretary,  Woman's  Department, 
The  National  Civic  Federation,  New  York. 

Committee  on  Constructive  Plan, 
Social  Insurance  Department, 
THE  NATIONAL  CIVIC  FEDERATION. 

New  York,  January  27,  1920. 


**• 


r 


j^^^^3I^5S5E 


-J 


■^ 


r: 


/ 


C 


COLUMBIA  UNIVERSITY  LIBRARIES 


\ 


?:: 


PIB141994 


/hsvA 


0  00  64 


I'v 


*^^ 


<b 


>» 


Sl> 


_  '?j  :.   ■  -o-    t-'rt  .-'  if^ij^ :'<!-, .->.-,.'X--i.J'^L''i.'C'V^-^-ir.\»- 


h'i 


END  OF 
TITLE 


